(1) This regular first appeal filed by Parkash Dev Chopra defendant No. 3. Is directed against the judgment and decree of learned Subordinate Judge, first class. Delhi Whereby he awarded a preliminary decree for recovery of R. 31,960/- with interest from the date of the institution of the suit till realization by sale of the mortgaged property is favor of the New Bank of India Limited plaintiff against the appellant. Devi Das Chopra and Sons Defendant No. 1 and Devi Das Chopra defendant No 2.
The appeal arises out of a suit for recovery of Rs. 31,960/- by sale of mortgaged property which was brought by the respondent-bank through its principal officer Pran Nath Abrol against Devi Das Chopra and Sons, Devi Das Chopra and Parkash Dev Chopra. Parkash Dev Chopra is the son of Devi Das Chopra. According to the allegations of the plaintiff. Defendant No. 1 is a joint Hindu family firm of which Devi Das Chopra is the Karta. Defendant No. 3. Who is a member of the joint family was working with his father in the said firm. It is stated that in May 1952 on the application of defendant No. 1 through defendants Nos. 2 and 3 the plaintiff sanctioned a Cash Credit limit to defendant No. 1 up to Rs. 15,000/- against the security of documents by way of equitable mortgage of their house No. 15A/18 situated in Western Extension Area, Karol Bagh, Delhi, Again an application of defendant No. 1 through defendants Nos. 2 and 3 the plaintiff increased the Cash Credit limit from Rs. 15,000/- to Rs. 20,000/- against the same security. To cover the Cash Credit account, defendant No. 1 through defendants Nos. 2 and 3 executed a prontoe for Rs. 20,000/- on 12th October 1953 in favor of the plaintiff agreeing to pay interest at the rate of 9 per cent. Per annum.
(2) By way of collateral security the defendant-firm deposited the title deed in respect of the above-mentioned house of the value of Rs. 56,000/- by way of equitable mortgage with the plaintiff. The Said title deed and a declaration form signed by defendants Nos. 2 and 3 to the effect that the property was free from encumbrances, were handed over to the plaintiff. Defendants Nos. 1 to 3 also hyptohecated and charged as collateral security their brickKiln to be in existence, the above security was nto pursued. The plaintiff claimed that Rs. 20,000/- as principal and Rs. 11,964, on account of interest at the rate of 9 per cent, per annum from the date of mortgage till the 4th March 1959, were due from defendants Nos. 1 to 3. The present suit was. Accordingly, filed on 16th March 1959 for recovery of Rs 31,960/-
(3) Ram Rakha Mal Gupta defendant No. 4, Jai Pal defendant No. 5 and Pushpa Devi defendant No. 6 were imp leaded as parties during the pendency of the suit on the ground of being the subsequent mortgagees of the property in dispute. The date of mortgage in favor of defendants Nos. 4 and 5 is stated to be 10th December 1958, while that in favor of defendant No 6 is stated to be 22nd April 1959.
(4) The suit was resisted by defendants Nos. 1 to 3. Defendants Nos. 1 and 2 in their written statement stated that though the loan was applied for from the plaintiff the equitable mortgage was nto enforceable because the document embodying the terms of the loan required registration. It was averred that there was no valid mortgage in favor of the plaintiff. Defendant No 3 in his written statement pleaded that the suit had nto been filed by a competent and authorised person on behalf of the plaintiff. Defendant No 3 denied that defendant No. 2 was the Karta of the firm According to defendant No. E, defendant no 1 was a partnership firm. Defendant No 3 further denied that nay equitable mortgage was created in favor of the plaintiff. As regards the property in suit the plea of defendant No 3 was that he was the sole owner of the same and it did nto constitute joint Hindu family property. According further to defendant No. 3. He was made to sign a number of documents by the to sign a number of documents by the to sign a number of documents by the plaintiff-bank on misrepresentation that those documents were merely applications for loan.
(5) Following issues were framed by the Court below:
(1) Whether the suit is defective for lack of particulars of interest and principal separately?
(2) Whether the suit is filed by a competent and duly authorised person?
(3) Whether the signatures of defendant No. 3 on prontoe dated 12th October, 1953 for Rs. 20,000/- and on letter of waiver and cash credit agreement of the date were meant only as a proposal and did nto constitute a Cash Credit agreement?
(4) Whether the letter dated 13th October 1953 is inadmissible for want of registration? If nto, whether signature on that letter did nto constitute an equitable mortgagee on the property?
(4A) Whether defendants Nos. 1 and 3 created an equitable mortgage on 12th October 1953 on the property in suit for Cash Credit account in suit?
(5) Whether the property in dispute is mortgaged with defendants Nos. 4, 5 and 6, and for what amounts?
(6) Whether the property belongs to defendant No. 3 also? If so. With what effect?
(7) What amount is due to the plaintiff from defendants Nos. 1 to 3?
(8) To what rate of interest is the plaintiff entitled?
(9) Whether plaintiff served a valid ntoice on defendant No. 3? If nto, what is its effect?
(10) Relief and against whom?
Issues Nos 1, 2, 3, 4, 4(A), 6 and 7 were decided in favor of the plaintiff and against defendants 1 to 3 . On issue No. 5 the finding was that defendants Nos 4 to 6 were subsequent alienees of the property in dispute but that had no effect on the plaintiff's claims as the plaintiff has a prior charge over the property in dispute. On issue No. 7 the finding was that Rs 20,000 on account of principal amount and Rs. 11,964, as interest were due to the plaintiff. On issue No. 7 the finding was that the plaintiff was entitled to recover interest at the rate of 9 percent per annum which was the agreed rate of interest, In the result a decree for rupees 31,960/- with interest from the date of the institution of the suit till the date of decree at the rate of 9 per cent and from the date of decree till realization at the rate of 6 per cent per annum was awarded by sale of the mortgaged property.
(6) In appeal Mr. Khanna on behalf of the appellant has argued that the letters, which were addressed by defendants 1 to 3 to the plaintiff-bank in connection with the deposit of the title deeds, required registration and as those letters were nto registered and as those letters were nto registered the plaintiff-bank could nto get a decree on the basis of an equitable mortgage in its favor. In this connection we find that after the Cash Credit limit of defendants Nos 1 to 3 had been raised by the plaintiff-bank to Rs 20,000/- defendants Nos 1 to 3 executed prontoe Exhibit P. 2 on 12th October 1953. This prontoe was signed by btoh defendants Nos. 2 and 3, and according to this prontoe defendants Nos. 1 to 3 promised to pay on demand the sum of Rs. 20,000/- with interest at a minimum rate of 9 per cent per annum. On the following day, i.e., on 13th October 1953 letter Exhibit P. 6 signed by defendants Nos. 2 and 3 on behalf of defendant No. 1 was addressed to the Manager of the plaintiff-bank as under:
'Please acknowledge receipt of the following title deeds deposited with you by us in connection with the C/C Limit of Rs. 20,000/- allowed to us on 12-10-1953.' The letter enumerated the title deed dated 14th June 1950 and site plan of the property in dispute. Antoher letter Exhibit P. 7 signed by defendants Nos. 2 and 3 on behalf of defendant No. 1 was also addressed to the Manage of the plaintiff-bank on 13th October 1958 to the following effect.
'With reference to the title deeds of our property deposited with you in connection with the Cash Credit Limit of Rs. 20,000/- allowed to us on 12-10-1953, we hereby declare that excepting the title deeds deposited with you there are no toher title deeds either with us or lodged with anybody else and that the property covered thereby is uncharged and free from all encumbrances whatsoever.'
It may be stated that the date put on Exhibit P. 7 was initially written as '12-10-1953' but later it was altered into '13-10-1953' , and the alteration initialed by btoh defendants Nos. 2 and 3. Antoher date '13-10-1953' was also then written on the letter. It appears, as deposed by Shri Pran Nath (P. W. 2), Manager of the plaintiff-bank, that has a correction of the date was made the same was gto initialled from defendants Nos. 2 and 3 on 13-10-1953, and antoher date '13-10-1953' was also inserted to put the thing beyond any pale of controversy. According to Mr. Khanna, letters registration as the effect of these letters was to create, an equitable mortgage in favor of the plaintiff-bank. This contention, in our opinion, is devoid of force. A mortgage by deposit of title deeds does nto require any writing but it is usual for the mortgage to be accompanied by a memorandum in writing. In order to decide as to whether the writing requires registration the Court has to see whether the writing itself constitutes the bargain or contract between the parties, or whether it is a record of an already completed transaction. In the former case the writing would require registration, but in the latter case it would nto. It would also depend upon the intention of the parties. If the parties intend to reduce their baring regarding the deposit of title deeds in the form of a document and want that document to be the only repository and appropriate evidence of their contract of equitable mortgage, the document would require registration. If on the toher hand the Court comes to the conclusion on construction of the document and consideration of the surrounding circumstances that the parties did nto intend to reduce the bargain into writing , the contract to create the mortgage would arise by implication of law by the deposit of title deeds with the requisite intention and a letter or a memorandum sent about the deposit of title deeds would nto require registration.
This question was gone into by their Lordships in the case of Rachpal Maharj v. Bhagwandas, : 1SCR548 . Patanjali Sastri C.J.. as he then was, while speaking for the Court, observed --
'The crucial question is : Did the parties intend to reduce their bargain regarding the deposit of the title deeds to the form of a document If so, the document requires registration. If no the toher hand, its proper construction and the surrounding circumstance lead to the conclusion that the parties did nto intend to do so, then, there being no express bargain, the contract to create the mortgage arises by implication of the law from the deposit itself with the requisite intention, and the document, being merely evidential does nto require registration.'
In the above-mentioned case accounts relating to the appellant's dealing with the respondents were taken and the appellant gave certain title deeds to the respondents for being held as security for the amounts then found due and which may become due, and on the same day the appellant gave a memorandum to the respondents in the form of a letter addressed to the respondents stating-
We write 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 yourselves and ourselves an the money that may hereafter become due on account of such transactions we have this day deposited with you the following title deeds relating to our properties at ..... with intent properties to secure all moneys including interest that may be found due.....'
It was held that the parties did nto intend to create a charge by the execution of the document, but merely to record a transaction which had already been concluded and under which rights and liabilities had already been created and the document did nto require registration. In United Bank of India, Ltd. V. Lekharam Sonaram and Co., : AIR1965SC1591 , Ramaswami J., speaking for the Court, observed-
'When the debtor deposits with the creditor title deeds of his property with an intent to create a security the law implies a contract between the parties to create a mortgage and no registered instrument is required under section 59 as in toher classes or mortgage. It is essential to bear in mind that the essence of a mortgage by deposit of title deeds is the actual handing over by a borrower to the lender of documents of title to immovable property with the intention that those documents shall constitute a security which will enable the creditor ultimately to recover the money which he has lent. But if the parties choose to reduce the contract to writing, this implication of law is excluded by their express bargain, and the document will be sole evidence of its terms. In such a case the deposit and the document btoh form integral parts of the transaction and are essential ingredients in the creation of the mortgage. It follows that in such a case the document which constitutes the bargain regarding security requires registration under section 17 of the Indian Registration Act, 1908, as a non-testamentary instrument creating an interest in immovable property, where the value of such property is one hundred rupees and upwards, If a document of this character is nto registered it cannto be used in the evidence at all and the transaction itself cannto be proved by oral evidence either.'
The question, which arose for determination in the above-cited case, was whether the following letter would require registration:
'I hereby authorises 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 Messrs. Lekharam Sonaram and Co., Giridih, better secured. I hereby further declare that I am the sole owner of the Giridih property as per schedule below and am legal joint heir with my sons dealing in the name of Messrs. Lekharam Sonaram and Co. Of the Malho property as described in the schedule below. I hereby further declare that btoh the properties described n the schedule are free from all 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 Messrs. Lekharam Sonaram and Co. With your Giridih branch are duly satisfied
Particulars of Properties.
1. Giridih property.
2. Malho property.'
It was held that the above letter was nto intended to be an integral part of the transaction between the parties and did nto by itself operate to create an interest in the immovable property and, thereforee, it did nto require registration.
(7) In Dwarka Das v. New Bank of India Ltd., Amritsar, , the question arose before a Division Bench as to whether the following two letters required registration:
'Please acknowledge a receipt of the following title deeds, deposited by me with you, in connection with an advance of Rs. 11,000/- made to me by the Bank on 29-10-1946, jointly with S. A. S. Jaspal.'
'With reference to an advance of Rs. 11,000/- made to me by the Bank on 2-10-1946, jointly with S. A. S. Jaspal against the deposit of the title deeds of my houses and premises known as 'Dove Villa' with attached piece of land measuring about 1713 Sq, Yards, situated below main railway Station Simla, I hereby declare that there are no toher title deeds in respect of the above property with me or lodged with anybody else excepting those deposited with you. I further declare that the above property is free from all sorts of encumbrances and that I am the sole owner of the property.'
The above two letters were written on 30th October 1946 while the prontoe by the debtor had been executed a day earlier on 29th October 1946. It was held that the letters purported to acknowledge or record the transaction which was completed a day earlier and by which an equitable mortgage had been created, and thereforee did nto require registration. The head-ntoe of a Division Bench case Chaluvadi Balaiah v. Central Govt. And the Union of India, : AIR1967AP51 , which is based upon observation in the body of the judgment, reads as under:
'On settlement of accounts of a certain sum was found due from B to A. B executed a promissory ntoe for the amount due and title deeds with respect to B's property were immediately handed over to A as security for repayment of the debt. The next day a memorandum executed by B and addressed to A merely recorded the transaction completed on the previous day and gave a list of the title deeds deposited with A. The memorandum did nto contain the terms of mortgage itself. Held that the execution of the promissory ntoe accompanied by the deposit of title deeds and the execution of the memorandum did nto form part of the same transaction. A valid mortgage had been created the previous day and the memorandum which merely recorded a past transaction did nto require registration under section 17, Registration Act and was thereforee admissible in evidence in a suit to enforce the mortgage.'
Keeping the principles enunciated above we have no doubt in our mind that letters exhibits P. 6 and P. 7 do nto require registration. Btoh the letters relate to the liability which had been undertaken by defendants Nos. 1 to 3 on 12th October 1953 i.e., a day; earlier on account of the cash credit limit of Rs. 20,000/-. Further, according to btoh the letters the title deeds had already been deposited with the plaintiff-bank. No terms of the mortgage were embodied in either of the two letters and it cannto be said that the patties intended the two letters to be the repository and evidence of the transaction of equitable mortgage. On the contrary perusal of the letters shows that they are record of a transaction which had already been concluded and under which the rights and liabilities has already been created.
(8) Reference has been made by Mr. Khanna to the fact that title deeds of the property in dispute were already with the plaintiff-bank since the time a Cash Credit limit of Rs. 15,000/- had been allowed to defendants Nos. 1 to 3. This fact, in our opinion, would nto make any material difference, because, as observed by Subba Rao. J, (as he then was), speaking for the Court in the case of K. J. Nathan v. S. V. Maruthi Rao, : 6SCR727 , physical delivery of documents by the debtor to the creditor is no the only mode of deposit. There may be a constructive deposit. A Court will have to ascertain in each case whether in substance there is a delivery of title-deeds by the debtor to the creditor. If the creditor was already in possession of the title-needs, if would be hyper-technical to insist upon the formality of the creditor delivering the title-deeds to the debtor and the debtor delivering them to the creditor.
(9) Stress has been laid by Mr. Khanna upon the fact that title-deed Exhibit P. 8 dated 14th June 1950 in respect of the property in dispute, which was deposited by defendants Nos. 1 to 3 with the plaintiff, was in favor of Parkash Dev Chopra and Brtohers, while the persons actually depositing the title-deeds were defendants Nos. 1 to 3. It is urged that as the persons depositing the title-deeds were different from the one in whose favor the title-deed was executed, the deposit of title-deeds would nto create am equitable mortgage. Reliance in this connection is placed upon the Division Bench case of Madras High Court v. Venkataramayya Pantulu v. Narasinga Row, reported in (1911) 9 IC 309 (Mad), wherein it was held that an equitable mortgage is nto created where the only document deposited shows no kind of title in the mortgagor depositor. There is no force in the above contention. At the time when defendants Nos. 1 to 3 applied for loan they wrtoe in the application that the joint Hindu family consisting of defendants Nos. 2 and 3 and antoher minor son of defendant No. 2 had been doing trade under the name and style of Devi Das Chopra & brtohers. It was further stated that Parkash Dev Chopra & Bros, were no longer doing any business, and the whole business was being done under the name and style of Devi Das Chopra & Sons. Affidavit Exhibit P.-36 was also given by Parkash Dev Chopra defendant No. 3 to the plaintiff and in that affidavit it was stated that the property in dispute, which had been purchased in the name of Parkash Dev Chopra and Brtohers was the property of the joint Hindu family and the money for purchasing and building the same had been spent from the joint Hindu family funds by Devi Das Chopra defendant No. 2 who was the Karta of the joint Hindu family. We thus find no force in the argument that the material on record with the bank did nto show that the persons depositing the title deed had a title in the property in dispute.
(10) Argument has then been advanced on behalf of the appellant that the property in dispute has nto been shown to belong to the joint Hindu family. This argument too is devoid of force, for in the affidavit Exhibit P. 36 filed by the appellant he clearly admitted, as stated above, that the property in dispute was joint Hindu family property and the money for purchasing and building the same had been spent from joint Hindu family funds by Devi Das Chopra who was the Karta of the Joint Hindu family. In the face of this admission by the appellant the onus shifted upon him to show that the same was erroneous and that the property in dispute was nto joint Hindu family property. The appellant has failed to discharge this onus.
(11) Lastly Mr. Khanna has argued that Pran Nath Abrol was nto competent to file the present suit on behalf of the plaintiff-bank. It is however, nto disputed that Pran Nath Abrol was the manager and principal officer of the Bank. As such Pran Nath Abrol should be held dto be competent to file the present suit. A power of attorney Exhibit P. -1 was also executed by the Plaintiff bank in favor of Pran Nath Abrol authorising him to Act as the lawful attorney of the plaintiff-bank. The fact that the registered officer of the bank at the time the power of attorney was executed was in Lahore but was subsequently shifted to New Delhi, would nto, in any way detract from the power of attorney.
(12) An attempt was also made on behalf of the appellant to challenge the validity of mortgage in favor of defendants Nos. 4 to 6 but as the arguments proceeded it was conceded by the learned counsel for all the parties that this is a matter which can be gone into either in execution or toher separate proceedings if some surplus is found from the sale proceeds of the property in dispute after payment of the amount due to the plaintiff.
(13) As a result of the above, the appeal fails and is dismissed with costs of respondent No. 1.
Om Parkash, J.
(14) I agree.
(15) Appeal dismissed.