Alfred Henry Lionel Leach, C.J.
1. This appeal raises the question whether an equitable mortgage is unenforceable by reason of the non-registration of a letter signed by the mortgagor at the time of the deposit of the title deeds. One P.M. Sadasiva Chetty, his sons Subramanian and Somasundaram (the third and fourth respondents), his brother Gangadhara Chetty and Gangadhara Chetty's son Thayamanava (the third defendant in the suit) constituted an undivided Hindu family. The family owned immovable property in Madras, 2-10 acres of land in Arasur village, Chingleput District and 42 acres of land and a rice mill in Ponneri village, which is also in the Chingleput District. The properties in Madras consisted of three houses and their sites, known as 16, Audiappa Chetti Street; 41, Guruvappa Chetty Street and 105, Egmore. High Road, respectively. On the 2nd August, 1930, Sadasiva, who was the manager of the family, borrowed from the first and second respondents Rs. 1,900 on a promissory note and as security deposited the titled deeds of No. 16, Audiappa Chetty Street. Before us it has not been disputed that this money was borrowed for the purposes of the family. At the time of the deposit Sadasiva signed and delivered to the mortgagees a letter in Tamil of which the following is the official translation:
On the 2nd August, 1930, the collateral letter executed in favour of two persons (1) C.V. Krishnaveni Ammal and (2) C. Sundaram Chetti, residing in house No. 3, Cuddapah Rangiah Chetty Street, Periamet, Madras, by P.M. Sadasiva Chettiar, son of the late P. Munisami Chetti, Vannia Vaisya caste, Saivaite, merchant, residing in house No. 16, Audiappa Chetti Street, Chintadripet, Madras. On executing a pro-note to you this date, Rs. 1,900 (rupees one thousand and nine hundred) has been received in cash from you. For this sum, I have kept with you as security, house No. 16, Audiappa Chetty Street, said petta, said Madras and the original title deeds relating to. the property. At the time when I discharge the aforesaid bond, I shall take back this letter as well as the aforesaid title deeds.
To t his effect have I executed this collateral letter with consent.
2. On the 22nd August, 1931, 41, Guruvappa Chetty Street, and 105, Egraore High Road, were mortgaged to the sixth defendant in the suit. He having died is now represented by his executrix, the sixth respondent. This mortgage was effected by a registered instrument signed by Sadasiva for himself as manager of the joint family and as guardian of the third defendant, whose father was then dead. On the 19th April, 1932, Sadasiva and his eldest son, the third respondent, executed two mortgage deeds in favour of the first and second respondents, one to secure Rs. 2,000, made up of the Rs. 1,900 borrowed on the 2nd August, 1930 and a further advance of Rs. 100, and the other to secure Rs. 500. The security for the first of these mortgages was No. 16, Audiappa Chetty Street and this mortgage was intended to take the place of the equitable mortgage. The security for the sum of Rs. 500 was the 42 acres of land and the rice mill in Ponneri village. The suit out of which the appeal arises was filed to enforce the mortgages.
3. On the 24th March, 1931, the minor third defendant through his mother, the appellant, instituted a partition suit on the Original Side of this Court (C.S. No. 471 of 1931). The minor died during the pendency of the suit and the appellant was made a party as his legal representative. The mortgage of the 19th April, 1932, which replaced the equitable mortgage of the 2nd August, 1930, having been created after the partition suit had been filed did not affect the minor's estate and the mortgagees are relegated to their rights, if any, under the equitable mortgage. The learned trial Judge (Wadsworth, J.) held that the letter which was given with reference to the deposit of title deeds did not require registration and therefore the minor's estate was bound by the equitable mortgage. On this basis he granted the mortgagees a mortgage decree in respect of the Rs. 1,900. Other contentions were raised before the learned Judge but the appeal -has been confined solely to the question whether the equitable mortgage of the 2nd August, 1930, can be enforced.
4. In the mortgage deed of the 19th April, 1932, for Rs. 2,000, made up of the Rs. 1,900 borrowed on the equitable mortgage and the further advance of Rs. 100, there is the following recital:
A sum of Rs. 1,900 (rupees one thousand and nine hundred) has already been borrowed from you on the 2nd August, 1930, by executing a bond and by giving you a collateral security letter as security thereof.
5. The appellant's case is that the letter given by Sadasiva at the time of the deposit of title deeds, read in the light of the recital in the mortgage-deed of the 19th April, 1932, just quoted, must be construed as a declaration of the mortgagees' rights on the property and therefore required registration under Section 17 of the Registration Act. Not having been registered it could not be admitted in evidence by reason of Section 49 of the Registration Act. The learned Judge treated the letter as a mere memorandum of a transaction previously completed and on this footing held that it did not require registration.
6. Before considering certain authorities which have been, quoted to us I will revert to the facts. As I have already stated, the execution of the promissory note, the deposit of the title deeds and the execution of the letter all took place on the 2nd August, 1930. It may be taken that the signing of the promissory note and the deposit of title deeds took place before the letter was signed in actual point of time. The evidence discloses that five or six days before the 2nd August the title deeds were handed over to the mortgagees to enable their representative to scrutinise them, the understanding being that if the title deeds proved to be in order they would advance money on equitable mortgage. The learned Judge has held that inasmuch as the second respondent said that the examiner of the documents had approved of the title five or six days before 2nd August, 1930, it was reasonable to infer that for these five days the title deeds remained with the second respondent as security for the loan and therefore there was a completed mortgage agreement some days anterior to the 2nd August, 1930. I find myself unable to share this opinion. The title deeds were handed over for the purpose of examination of the title and they must be deemed to have remained with the mortgagees for that purpose until they intimated to Sadasiva on the 2nd August, 1930, that they were willing to advance the money. On the evidence both of the second respondent and of the person who examined the deeds it is clear that they were handed over merely for the purpose of examination of title and that there was no deposit by way of equitable mortgage until 2nd August, 1930. The case, therefore, cannot be decided on the basis that there was a completed transaction before that date. With these observations I will now proceed to the examination of the authorities.
7. In Subramanian v. Lutchman (1922) 44 M.L.J. 602 : L.R. 50 IndAp 77 : I.L.R. 50 Cal. 338 , the Privy Council had to consider a memorandum which was signed and delivered by the mortgagors at the time of the deposit of title deeds by way of equitable mortgage. It was held in that case that oral proof of the mortgage was inadmissible because the document drawn up constitued the bargain between the parties. There the memorandum was in the following terms:
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 Ahmad Seedat, also his promissory note for rupees sixty-three thousand (Rs. 63,000) due us, this please hold as security against advances made to us; we also hand you second mortgage executed in our favour by C. Rangaswamy Mudaliar on first Class Lot No. 6 in Block F-1. 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 same till your amount due is fully paid and satisfied.
8. Lord Carson who delivered the judgment of the Board said that their Lordships had no doubt that the memorandum in question was the bargain between the parties, and that without its production in evidence the plaintiff could establish no claim, and as it was unregistered it ought to have been rejected. Their Lordships were here applying the principles laid down in Pranjivandas Jagjivandas Mehta v. Chan Mah Phee (1916) 31 M.L.J. 155 : L.R. 43 IndAp 122 : I.L.R. 43 Cal. 895 and Shaw v. Foster (1872) L.R. 5 H.L. 321.
9. The question of the admissibility of a memorandum relating to a deposit of title deeds was considered by the Privy Council in Obla Sundarachariar v. Narayana Aiyar (1931) 60 M.L.J. 506 : L.R. 58 IndAp 68 : I.L.R. 54 Mad. 257 . There the memorandum consisted of a list of title deeds with the following introductory words:
Written to E.N.A. Samoo Pattar by Krishnaswami Aiyar, of S.V. Ramaswami Aiyar and Brothers. As agreed upon in person I have delivered to you the under mentioned documents as security.
10. Section 17 of the Indian Registration Act requires registration of non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in 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. Lord Tomlin, in delivering the judgment of the Board, pointed out that the question which fell to be determined was whether the memorandum, having regard to its true construction and the circumstances in which it came into existence and passed into the hands of the plaintiff, was an instrument of this nature. Their Lordships regarded the memorandum as a list of the documents deposited and nothing more. It did not embody the terms of the agreement between the parties, and therefore did not require registration. While their Lordships did not think that the language of Lord Carson in Subramanian v. Lutchman (1922) 44 M.L.J. 602 : L.R. 50 IndAp 77 : I.L.R. 50 Cal. 338 conveyed or was intended to convey the meaning that no memorandum relating to a deposit of title deeds could be within Section 17 of the Registration Act, unless it embodied all the particulars of the transactions of which the deposit formed part, they were of opinion that no such memorandum could be within the section unless on its face it embodied such terms and was signed and delivered at such time and place and in such circumstances as to lead legitimately to the conclusion that so far as the deposit was concerned it constituted the agreement between the parties.
11. In the recent case of Sir Hari Sankar Paul v. Kedar Nath Saha (1939) 2 M.L.J. 522 : L.R. 66 IndAp 184 : I.L.R. (1939) 2 Cal. 243 : 43 C.W.N. 806 , the Privy Council after reviewing their earlier decisions expressed themselves thus:
Their Lordships are of opinion that where, as here, the parties professing to create a mortgage by deposit of title deeds contemporaneously enter into a contractual agreement, in writing, which is made an integral part of transaction and is itself an operative instrument and not merely evidential, such a document must under the statute be registered.
12. Therefore what is to be considered in the present case is whether the memorandum of the 2nd August, 1930, was made an integral part of the transaction and is an instrument intended to declare the right of the mortgagees in the property and not merely a record of what had transpired.
13. The memorandum under discussion is written in part in the past tense. It states:
On executing a pronote to you this date, Rs. 1,900 has been received in cash from you. For this sum, I have kept with you as security house No. 16, Audiappa Chetti Street, said petta, said Madras, and the original title deeds relating to the property.
14. But it goes on to say:
At the time when I discharge the aforesaid bond, I shall take back this letter as well as the aforesaid title deeds
and concludes with this statement:
To this effect have I executed this collateral letter with consent.
15. If the letter is read as a whole there is a great deal to be said for the argument that it was intended to constitute the bargain between the parties, but our attention has been drawn to the decision of Schwabe, C.J. and Ramesam, J., in Krishnayya v. Ponnuswami Aiyar (1923) 46 M.L.J. 295 : I.L.R. 47 Mad. 398, where it was held that a memorandum in the following terms did not require registration:
Collateral security letter in respect of a house executed in favour of Messrs. Peruru Viswanadham and Koneti Desikacharyulu Company of Madras. As you have this day obtained an assignment of the sum of Rs. 1,945 due by me to Messrs. Peruru Viswanadham & Co., the same being the sum of principal and interest due, I have this day executed a pronote in your favour for this sum and the sum of Rs. 500, taken to-day, i.e., the total of Rs. 2,445; so let it be known that for that I have retained with you as collateral security my document of the Collector's certificate No. 815 in respect of my house bearing door No. 11 in Tiruvattiswaranpet, Madras.
16. This memorandum has much in common with the memorandum under consideration in the present case. It is described as a collateral security and states what had preceded its execution. The learned Judges, however, treated it merely as a record of a completed transaction made for the purpose of recording facts for the information of a new firm. The position herb is not analogous and there is the further factor that in the mortgage deed of the 19th April, 1932, which the mortgagees obtained from the mortgagor the memorandum of the 2nd August, 1930, is described not only as a collateral security letter but as security for the loan. Can it be said in these circumstances that the parties were merely contemplating a record of a completed transaction and not an operative instrument? When the memorandum is read in the light of the recital in the subsequent deed of mortgage it seems to me that the only conclusion open is that it constituted the bargain between them and operated to declare the rights of the mortgagees in the property. Consequently I hold that the memorandum falls within Section 17 of the Registration Act and ought to have been registered. Not having been registered it cannot be admitted in evidence which means that the equitable mortgage cannot be proved.
17. I would allow the appeal with costs both here and below against the first and second respondents.
Kunhi Raman, J.
18. I agree.