Veeramachineni Gangadhara Rao Vs.
Andhra Bank Ltd. Ors  INSC 95 (25 March 1971)
CITATION: 1971 AIR 1613 1971 SCR 209
Indian Registration Act, 1908, s. 17-Mortgage
by deposit of title deeds-Document evidencing mortgage when must be
registered-Document which itself does not create contract but is only
memorandum of contract already entered into need not be registered-Further
evidence to prove terms of agreement not barred by ss. 91 & 92 Evidence
The respondent Bank gave a loan to Godavari
Sugars Refiners Ltd., of which defendants 1 to 3, as partners, were managing
agents. Subsequently the bank filed a suit for the recovery of the loan. The
appellant, a brother of defendant No. 1, was impleaded as defendant No. 4 and
Godavari Sugars as defendant No. 5. The suit was decreed and the decree was
upheld by the High Court. Only Defendant No.4 appealed tothis Court. The decree
against the appellant was passed on the basis of Exh. 1-6, a document which was
signed by Defendants 1 & 4 and in which it was recorded that the title
deeds Exhs. A-7 and Exh. A-8 had been deposited with the respondent bank as
security for money due. According to the appellant the said title deeds had
been deposited by him as security for a loan given to him by the bank in his
individual capacity, and that the signature of defendant no.
I had been appended to Exh. A-6 only because
he bad an interest in one of the properties covered by Exhs. A-7 and A-8.
HELD.If the parties intend to reduce their
regarding the deposit of title deeds to the
form of a document the document requires registration. If on the other hand its
proper construction and the surrounding circumstances lead to the. conclusion
that the parties did not intend to do so, then, there being no express. bargain
the contract to create a mortgage arises by implication of the law from the
deposit itself with the requisite intention, and the document being merely
evidential does not require registration. [220 H-221A] Rachpal Maharaj v.
Bhagwandas Daruka & Ors.,  S.C.R, 548 Pranjivandas Mehta v. Chan Ma
Phee, L.R. 43 I.A. 123, Shaw v. Foster: (1872) L.R. 5 H. L. 321,341 and
The language of Ex. A-6 was undoubtedly wide
and if it governed the agreement between the parties then there could be no
doubt that the suit debts were also secured by the deposit of title deeds A-7
and A-8. But Ex. A-6 could not be considered a contract governing the rights of
the parties because: (a) it was incomplete inasmuch as certain unnecessary
words which were meant to be struck out were not actually struck out; (b) while
according to the plaintiff the appellant agreed to secure the debt due from the
first defendant to the Bank in consideration of the Bank not proceeding against
defendants 1 to 3, no such term was found in Ex. A-6; (c) from the recitals of
Ex A-6 it was seen that the memorandum in question was intended to 'Put on
record' the terms already agreed upon. If the parties intended that the
document should embody the contract between them it would have been necessary
to register the same under s. 17 of the Registration Act, 1908. [22OA-D] 14-1
S. C. India/71 210 Exhibit A-6 was not registered. If that document was
considered as a contract of mortgage between the Bank and the depositors, the
same not having been registered it was inadmissible in evidence. If on the
other hand that document was considered as a' mere memorandum evidencing the
deposit of title deeds in pursuance of an earlier contract then the correctness
of the recitals therein could be gone into without being inhibited by ss. 91
and 92 of the Evidence Act. Whichever view was taken the plaintiff's case must
fail. On an overall consideration of the evidence and probabilities of the case
it was established that Exbs. A-7 and A-8 were not deposited with the Bank to
secure the debts due from defendant No. 1 to the Bank. [222C-E] The appeal must
accordingly be allowed.
& CIVIL APPELLATE JURISDICTION: Civil
Appeal No. 786 of 1966.
Appeal by special leave from the judgment and
order dated June 9, 1964 of the Andhra Pradesh High Court in Appeal No.96 of
K. R. Chaudhuri, for the appellant.
B. V. Subramanyam, A. Subba Rao for A. V.
Rangam, for respondent No. 1.
The Judgment of the Court was delivered by
Hegde, J The 4th defendant in Original Suit No. 200 of 1954 in the court of
Subordinate Judge, Vijayawada is the appellant in this appeal by special leave.
That was a suit instituted by the Andhra Bank Ltd., the contesting respondent
in this appeal. The suit was to recover the loans advanced to the Godavari
Sugars Refiners Ltd., defendant No. 5 in the suit. The suit was decreed against
all the defendants and that decree was affirmed by the High Court in appeal.
The decree against the other defendants has become final. The only question
that arises for decision in this appeal is whether the decree against the
appellant is sustainable. The High Court rested the decree against the
appellant only on the basis of Ex. A-6 a letter given by defendants 1, 4 and
another to the Masulipatam branch of the plaintiff bank while, depositing Exhs.
A-7 and A-8. In order to decide the correctness of the decree, it is necessary
to refer to the material facts as found by the trial court and the High Court
and which are no more in dispute.
Defendants I to 3 were the partners of a
company known as Aid Co. Ltd. (defendant No. 6). That company was the managing
agents of defendant No. 5, the Godavari Sugars Refiners Ltd. which will
hereinafter be referred as Godavari Sugars. The first defendant was the
Managing Director of the Aid Co. Ltd. On January 29, 1952, the first defendant
made an appli211 cation 'on behalf of Godavari Sugars to the Andra Bank Ltd.
(which will hereinafter be referred to as the
Bank) for a loan of three to four lakhs ofrupees under the keyloan and cash
credit account and on the guarantee and co-obligation of defendants 1 to 3 in
their personal capacity also. The Managing Director and the General ,Manager
recommended 'that applicalion to the Board of Directors upto a limit of Rs. 1,25,000.
Before the sanction of the Board of Directors was obtained, the first defendant
requested the Managing Director to sanction Rs. 50,000 tentatively as there was
urgent need. The Managing Director sanctioned a sum of Rs.50,000 in
anticipation of the loan to be granted in pursuance of the application (EN, A3)
made by the first defendant on January 29, 1952. The Managing Director
authorised the agent of Bhimavaram branch to obtain the necessary documents
signed by defendants 1 to 3 in their personal capacity as well as the first
defendant as the Managing Director of the managing agents and on behalf of
Godavari Sugars. A pronote and the cash credit agreement relating to that loan
were handed over to the agent of Bhimavaram branch on April 24, 1952 after the
same were executed by defendants 1 to 3. Thereafter defendant I drew from the
Bhimavaram branch Rs. 20,100 on April 25, 1952 and Rs. 9,000 on April 25, 1952.
But he deposited a sum of Rs. 8,100 on April 25, 1952. Thus a sum of Rs. 21,000
was due to the bank under the loan in question on April 26, 1952.
On that date the Board of Directors sanctioned
the loan asked for under Ex. A-3 upto a limit of Rs. 1,25,000.
Sometime thereafter the authorities of the
Bank learnt that on a creditor's winding up petition a provisional liquidator
for the Godavari Sugars had been appointed by the High Court of Madras without
objection from defendants 1 to 3 on April 18, 1952. That fact had not been
brought to the notice of the Bank authorities by defendants 1 to 3 when the
advances were made on the 25th and 26th of April 1952. After coming to know of
that fact, the Manager and the Managing Director of the Bank pressed defendants
1 to 3 to repay the amount drawn. But they were advised by Satyanarain
Chowdary, the father-in-law of the first defendant (2nd defendant is the wife
of the first defendant and the third defendant his mother-in-law) lo plead
before the High Court that the Bank was a pledgee of the articles pledged for
the keyloan and as such had a lien over the pledged goods in respect of the
advances made. The Bank accordingly moved the High Court claiming a lien over
the goods pledged but that claim was rejected by the High Court. In connection
with the proceedings before the High Court the Bank incurred an expenditure of
Rs. 1548-10-6. The claim against defendants 1 to 3 is based on the above facts.
That claim has been decreed as mentioned earlier. The decree to that extent has
212 Now coming to the claim against the
appellant which is the only claim material for our present purpose, the facts
disclosing the cause of action against him as set out in the plaint paragraph 9
are as follows :
"The defendants 1 and 4 requested the
plaintiffbank to refrain from taking legal action at that time (after the
bank's claim was rejected by the High Court) and give them time. For all sums
due till then and owing thereafter on any account by the defendants 1 and 4
either individually or jointly with others, two titles deeds (Exhs. A-7 and
A-8) were deposited with the bank on 15-1-1953 at Masulipatam thereby creating
Equitable Mortgage over the properties comprised therein and situated within
the jurisdiction of this Honourable Court.. In consideration of the above
deposit,, the plaintiff-bank refrained taking legal proceedings against the
defendants 1 to 3 for the amount due and loss occurred to the plaintiff-bank and
an overdraft account was also sanctioned to the defendants 1 and 4. Thus the
plaintiffbank has got security over the properties shown in the schedule
covered by 'the two title, deeds deposited with the plaintiff-bank on 15-1-1953
at Masulipatam for the suit debt, the particular of which are "detailed
According to the plaint a mortgage by deposit
of title deeds was created in pursuance of the contract set out above. In this
appeal we are only concerned with the truth of that contract.
The appellant denied the allegations
contained in para 9 of the plaint. According to him he had nothing to do with
the suit transactions and that he never requested the Bank to refrain from
taking legal action against defendants 1 to
3. He went further and averred in his written
statement that he did not know anything about the suit transactions till the
Bank refused to return to him Exhs. A-7 and A-8.
Dealing with the deposit of Exhs. A-7 and
A-8, he averred that those documents were deposited to create an Equitable
Mortgage to secure an overdraft loan of Rs. 25,000 borrowed by him and that
deposit has nothing to do with the suit transactions.
The only question for decision is whether
Exhs. A-7 and A-8 were deposited to secure the suit debts. In order to decide that
question it is necessary to set out a few more facts.
Defendants 1 and the appellant are divided
brothers. The first defendant was having his business in Madras. The appellant
was having his business at Masulipatam. Madras and Masulipatam are quite far
off from one another. Both the appellant and defendant No. 1 appear to have had
separate dealings with the 213 Bank even prior to the suit transactions. We
have earlier referred to the loan application Exh. A-3 made by the first
defendant and the advances made. From the pronote as well as the cash credit
agreement referred to earlier, it appears that the loan was made on the
security of the goods belonging to Godavari Sugars as well as on the personal
security of defendants 1 to 3. That is also the basis on which the Board of
Directors of the Bank sanctioned the loan-see Exh. A-71. Neither in Exh. A-3
nor in Exh. A-71 nor in any of the correspondence that passed between the Bank
and defendant No. 1 there is any reference to the fact of appellant's either standing
as a surety for the loans advanced to the Godavari Sugars or his having given
his property as security for that loan. It is also admitted that in the books
of account kept by the Bank, the Equitable Mortgage created by the deposit of
Exhs. A-7 and A-8 is not shown as a security for the advances mentioned in the
plaint. There is neither documentary evidence nor reliable oral evidence to
support the averments in para 9 of the plaint. In none of the correspondence
that passed between the Bank and defendant No. 1 or that passed between the
Bank ,and the appellant, there is any mention of the fact that at the instance
of the appellant, the Bank had refrained from taking action against defendants
1 to 3. Nor is there any mention in them that because of the deposit of A-7 and
A-8 along with the memorandum Ex. A-6 the Bank refrained from taking action
against defendants 1 to 3. Neither the Manager nor the Managing Director of the
Bank who have been examined in support of the Bank's claim spoke to the fact that
theyrefrained from taking action against defendants 1 to 3 at the instance of
the appellant or that they refrained from taking action against them because of
the equitable mortgage referred to earlier.
Three witnesses namely P. Ws. 1 to 3 were
examined in support of "the plaintiff's case. Neither P.W. 1 nor P.W. 2
speaks to the circumstances under which Ex. A-6 came to be executed. P.W. 3,
the Managing Directorof the Bank deposed in his Chief Examination as follows:
"D-4 applied for a loan as per Ex. A-67.
He met me in that connection. D-1 also met me in that connection. D-4
represented that D-1 had commitments in regard to Godavari Sugars, that the and
D-1 wanted monies and requested me to get Ex. A.67 be sanctioned representing
that they would deposit-title deeds that Would be additional security to
safeguard the interest of the "bank. I told him that the loan of Rs.
50,000 could' be" 'Sanctioned if he agreed to pay outright the amount due
from D-1. D-4 represented that might prejudice our claim before the High Court
as pledgee and that there would be 214 deposit of title deeds he. made a
request ultimately to sanction at least Rs. 25,000.
D-1 also represented that title deeds would
deposited and requested that the loan might be granted. Under Ex. A-67 loan of
25,000 was granted. D-1 and D-2 gave title
deeds as security for it. We did not take criminal action on the assurances
given by them.
This evidence is not consistent with the
averments in plaint paragraph 9 to which reference has been made earlier. It
makes out a new case. Further from that evidence, it is clear that the deposit
of title deeds Ex. A-7 and Ex. A-8 were made to secure only the loan of Rs.
25,000 given to the appellant. The uncontroverted evidence in this case clearly
establishes that the said loan was borrowed by the appellant for his own
business. Further in his cross-examination P.W.
3 deposed that "the deposit of title
deeds was made in terms of Board's Resolution and as agreed to between the
The Board's Resolution granting loan to the
Godavari Sugars on the application of defendant No. 1 does not either directly
or indirectly refer to any mortgage by deposit of title deeds or even to any
security of immovable property for the loan in question. The question of depositing
title deeds was not before the Board when the loan was sanctioned to Godavari
Sugars. But the loan granted to the appellant as we shall presently see was on
the basis of a mortgage by deposit of title deeds.
Before considering the scope and effect of Ex.
A-6, it is necessary to refer to the circumstances leading to the execution of
Ex. A-6. On October 15, 1952 under Ex. A-67, the appellant applied for a loan
of Rs. 50,000. Column four in that application refers to the purpose for which
the loan was asked. The answer given was "For business". Under column
"Other additional guarantee or security", answer given was "On
the security of title deed i.e. sites possessed by me at Vijayawada Krishna
District which costs about one Lakh at present-Market value" In the
covering letter the appellant stated .
"sir, As desired above, I request for
sanction of loan of Rs. 50,000 on secured overdrafts Being bound by your
previous Bank Rules and also bound by any changes in them, we will clear the
loan according to your current Bank rate.
Otherwise if we fail to clear the loan in
time, we will not only pay, as and when necessary, the penal interest, but also
agree, to be bound by all the actions taken against us.
215 Further changes in the particulars of the
property given in the list have been affected.
We have not made any sort of alienations
whatsoever on this property. Until your loan is cleared, we are not going to
make any sort of alienations. If becomes necessary to do so, we will do the
same after obtaining your consent, Be pleased to consider Sd/-Veeramachaneni
Gangadhara Rao (In Telugu)".
This application was placed before the Board
of Directors on January 11, 1953. The relevant agenda for the Board's consideration
reads as follows:
3.To consider the application of Mr. Veerama
chaneniGangadhararao. Masulipatam, for a secured overdraft limit of Rs. 50,000
for one year at 7% p.a. on the co-obligation of Messrs. Kolli Surya Prakasa Rao
and Adusumilli; Venkata Krishna Rao and on the mortgage by deposit of title
deeds relating to the applicant's sites of the extent of about 2,662 sq. yds.
at Vijayawada of the approximate value of about Rs. One Lakh.
Sanctioned Rs. 25,000." From the above
facts it is clear that the loan of Rs. 25,000 granted to the appellant was a
secured loan-secured by a mortgage by deposit of title deeds in respect of his
sites at Vijaywada. It may be noted that neither the appellant nor his
co-obligants are shown to have had anything to do with Godavari Sugars. It appears
from the records of the Bank that some of documents deposited were not
Therefore the Bank found it necessary to have
legal advice in the matter. According to the appellant one of the items covered
by Exh. A-7 was of the joint ownership of himself and his brother defendant No.
1, hence the officers of the Bank wanted defendant No. 1 also to join in making
the deposit of title deeds; but defendant No. 1 was a that time in Madras;
therefore a printed form was given to for getting the signatures of defendant
No. 1; the place at defendant No. 1 was to sign in that form was marked in
pencil that form was sent to Madras with his clerk accompanied by a bank
official; defendant No. 1's signatures were obtained; there after the same was
signed by him in the presence of the Bank's agent at Masulipatam and given to
the Bank's agent without scoring out any of the words in the printed form.
The appellant does not appear to be familiar
with English language. As could 216 be seen in Ex. A-67. he has signed that
same id Telugu.
Ex. A-6, as mentioned earlier, is in a
printed form, That was a readymade form which could, be used for various
purposes. It was an all comprehensive form relating to the deposit of title
deeds. It is clear from the terms in that form that the parties were required
to strike out the unnecessary terms and conditions in that form. Admittedly no
term in Exh. A-7 was struck out. According to P.W. 1, the agent of the Bank,
the appellant brought that form at about 5 p.m. just when the Bank was about to
Therefore he did not strike out the
unnecessary words in that document. In this background, we have to see whether
Exh. A-6 ,is only a memorandum in support of the deposit of Exhs. A-7 and A-8
to secure the loan advanced to the appellant under Exh. A-67 or whether the
deposit of title deeds in question were intended to secure that loan as well as
all amounts due from defendant No. 1 to the Bank. The loan advanced to the
appellant under Ex. A-67 has been admittedly discharged and the pronote
executed by him in that connection had been returned to him. The loans granted
to Godavari Sugars were disbursed at the Bhimavaram Branch of the Bank as could
be gathered from plaint paragraph 5.
The loan sanctioned to the appellant was
disbursed at the Masulipatam branch. Exb. A-6, A-7 and A-8 were produced in the
Masulipatam Branch. The Masulipatam Branch does not appear to have had anything
to do with the loans advanced to Godavari Sugars. We have earlier mentioned
that in the accounts relating to the loan given to Godavari Sugars, ,ther e is
no mention as to the deposit of title deeds. All the correspondence relating to
the loans granted to Godavari Sugars proceed on the basis that they were
granted on, the perso nal responsibility of the defendants 1 to 3 and on the
pledge of the goods belonging to that company-see Ex.A-3, loan application Ex.
A-2, agreement for cash credit on the security of pledged goods, Ex. A-13,
letter written, to the agent, Bhimavaram Branch by the General Manager of the
Bank on April 15, 1952, Exh. A-14 letter, written by the General Manager to the
Agent, Bhimavaram Branch on April 16, 1952, Ex. A-17, letter written by the
first defendant to the Bank on, October 29, 1952, But the correspondence that
passed between the appellant and the Bank shows that the deposit of title.,
deeds. was made to secure the loan advance to him under Ex. A-67. Under Ex.
A,20 the appellant wrote, to the, Bank on October, 15, 1952 as follows:
"Dear Sir, I have, two sites at Bezwada
worth about; Rs.1,00,000 and 1. propose to deposit Tide Deeds of the same and
require a secured over-draft of Rs. 50,000 against the same. My property
statement is with you. I shall therefore be glad if you sanction the same at an
early date........... " 217 To the same effect is the loan application
made-,by him on the same date. But an' overdraft of Rs. 25,000 only was
On February 6, 1954, the appellant wrote to
the Bank that he had cleared the overdraft account of Rs. 25,000 but he wanted
a renewal of over-draft arrangement (Ex. A-22). He sent a reminder in that
connection on April 1, 1954 (Ex. A-23). As the Bank delayed in making available
the over-draft facility asked for, he wrote to the Bank on Septr. 20, 1954
under Ex. A-25 as follows "Masulipatam Dated 20-9-54.
V. Gangadhara Rao Chowdary Managing Director,
Indian Industrial & Scientific Co. Ltd.
To The General Manager, The Andhra Bank Ltd.,
Sir, Sub: Over Draft Facility granted to me.
With reference to the overdraft renewed by
your Board of Directors in the month of May 1954, for Rs. 25,000 and which was
not' allowed to be drawn by me, I specially request you to kindly facilitate
for my drawing an amount up to Rs. 15,000 from the overdraft account, is due to
the stoppage of this facility, which I am enjoying since 4 years, my business
is suffering a lot and immediate investment is necessary to meet urgent demands
in my business of Scientific Apparatus etc.
In this connection I confirm the discussion I
had with your Managing Director at my residence, requesting me to mediate for
the amicable, settlement of the affair of my brother,' Sri V. Butchiyya
Chowdary with your bank regarding the key loan account granted to Godavary
Sugars 'and Refiners Ltd.
I shall be obliged for immediately allowing
'me to draw the amount.
From this letter it is clear that the Bank
was putting pressure on the appellant to persuade his brother defendant No. 1
to amicably settle the suit loans; That is also the' evidence of the appellant.
The allegation in this letter that 'the Managing 218 Director was requesting
the appellant: to mediate for the amicable settlement of the affairs of
defendant 1 with the Bank regarding suit loans does not appear to, have been
repudiated in any of' the letter,% written by the Managing Director to the
appellant. Though the Board of Directors of the Bank sanctioned on February 14,
1954, the renewal of.
the over-draft facility asked' for by the
appellant the appellant was not permitted to utilise that facility. The
appellant's case is that the Managing Director of the Bank was using that
opportunity to put pressure on him to see that defendant 1 discharged the suit
loans. Being fed' up with the delaying tactics of the Bank, the appellant
withdrew his loan application and asked the Bank to return his title deeds. It
is only at that stage that the Bank took up the position that the title deeds
deposited were also intended to secure the amounts due from defendant 1 to the
Bank. The appellant repudiated' that claim. Then the Bank issued the lawyers'
notice Ex. A-18 to all the defendants on April 5, 1954. Therein it was stated'
for the first time that the Bank refrained from proceeding against defendants 1
to 3 in respect of the suit transactions at the instance of Satyanarayan
Chowdary and the appellant and those two persons had agreed to indemnify the
Bank any loss that may be, caused due to those transactions. Further suggestion
in that notice is that in pursuance of that agreement Ex. A-7 and A-8 were deposited
under Ex. A-6.
These allegations were repudiated' by the
appellant in his registered reply notice Ex. A-19 date& April 21, 1954.
From the above discussion it is clear that
apart from Ex.A-6, there is absolutely no evidence to show that the deposit of
Exhs. A-7 and A-8 was intended to secure not merely the loan advanced' to the
appellant under Ex. A-67 but also to secure the suit loans. or other debts due
from defendant to the Bank. The oral evidence of P.W. 3, the Managing Director
is of no assistance as seen earlier. It does not connect the deposit of title
deeds, Exhs. A-7 and A-8 with any of the debts due from defendant 1.
This leaves us with Ex. A-6, the printed form
containing the terms and conditions under which Exhs. A-7 and A-8 were
deposited. The material portion of that document reads as follows:
"To The Agent, The Andhra Bank Ltd.,
Dear Sir, I/We write to put on record that as
already agreed, upon I/We have on 15-1-53 delivered by way of deposit 219 at
Masulipatam then. following documents of title to immovable property with
intent to secure the repayment to, the Bank of moneys that are now due or shall
from time to time or at any time be due from me/ us either solely or jointly
with any other person or persons to the Bank whether on balance of account or
by discount or otherwise in respect of Bills of Exchange, Promissory Notes,
Cheques and other negotiable instruments or in any manner whatsoever and
including interest. commission and other banking charges and any law costs incurred
in connection thereto.
LIST OF DOCUMENTS
-----------------------------------------------------------S. Nature of Title
Description Estimated No. deed and date property and value exact situation
1. Sale Deed D/ 4-2-49. Two plots of house
site bearing assessment No. 7 501 in ward No.
22 and bearing No.
21612 N. T. S. 663 Block No. 13 (sic) Ward
No. 9 measuring 0.28 (sic) and the other O.27(sic) 2. Registration Extract
House site measuring 1140Sq.Yds. of Sale Deed D/ 30-12-36. bearing Town S. No.
599 in new Ward No. 19 in Bezwada Town.
3.Encumbrance certificate Ec. 574152.
4.Encumbrance certificate No. Ec. 555152.
Yours faithfully Sd./-1. Veeramanchaneni
2. V. Butchaigh Chowdary
3. Sri Krishna Prasad being minor by father
Veeramachaneni Gangadhara Rao 5. Plan of (sic) in N. T. S.
No. 663 Block No. 13 of Ward No. 9,
As mentioned,earlier this is a printed form. No part of that form had been
struck out though the expressions "I" "Me" found in that
document are inconsistent with the other portions of that document. We have earlier
referred to the evidence of the agent of the Masulipatam branch of the Bank (P.
W. 1) that he did not strike out the unnecessary words in Ex. A-6 as it was
presented before him late in the evening.
The language of Ex. A-6 is undoubtedly wide
and if it governs the agreement between the parties then there can be no doubt
that the suit debts are also secured by the deposit of title deeds A-7 and A-8.
In the first place Ex. A-6, for the reasons already mentioned must be held to
be an incomplete document. Therefore it cannot be considered as a contract
between the parties. According to the plaintiff, the appellant agreed to secure
the debt due from the first defendant to the Bank in consideration of the Bank
not proceeding against defendants 1 to 3. No such term is found in Exh. A-6.
From the recitals of Exh. A-6, it is seen
that that memorandum in question was intended to "put on record" the
terms already agreed upon. That being the case, the document cannot be
considered as a contract entered into between the parties. If the parties
intended that it should embody the contract between them, it would have been
necessary to register the same under s. 17 of the Registration Act, 1908. As
observed by this Court in Rachpal Maharaj v. Bhagwandas Daruka and ors.(1) that
"when a debtor deposits with the creditor title deeds of his property with
intent to create a security, the law implies a contract between the parties to
create a mortgage and no registered instrument is required under s. 59 as in
other forms of mortgage. But if the parties choose to reduce the contract to
writing, the implication is excluded by their express bargain, and the document
will be the sole evidence of its terms. In such a case the deposit and the
document both form integral parts of the transaction and are essential
ingredients in the creation of the mortgage. As the deposit alone is not
intended to create the charge and the document, which constitutes the bargain
regarding the security, is also necessary and operates to create the charge in
conjunction with the deposit, it requires registration under s. 17 of the
Indian Registration Act-, I 1908, as a non-testamentary instrument, creating an
interest in immovable property, where the value of such property is one hundred
rupees and upwards." Therefore 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 on (1) 
221 the other hand. its proper construction
and the surrounding circumstances lead to the conclusion that the parties did
not 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 not
The law relating to the nature of a
memorandum filed along with the deposit of title deeds or one filed thereafter
has come up for consideration by courts in this country as well as in England.
The decisions on the subject are numerous.
We have already referred to the decision of
this Court in Rachpal Maharaj's case (1). We shall now refer to two of the
decisions , of the Judicial Committee. In Pranjivandas Mehta v. Chan Ma Phee(2)
dealing with the law on the subject Lord Shaw of Dunfermline observed "The
law upon this subject is beyond an doubt (1)Where titles of property are handed
over, with nothing said except that they are to be security, the law supposes
that the scope of the security is the scope of the title. (2) Where however,
titles' are handed over accompanied by a bargain, that bargain must rule. (3)
Lastly, when the bargain is a written bargain, it, and it alone, must determine
what is the scope and the extent of the security. In the words of Lord Cairns
in the leading case of: Shaw v. Foster (3), "Although it is a well established
rule of equity that a deposit of a document of title, without more, without
writing, or without word of mouth will create in equity a charge upon the
property referred to, I apprehend that that general rule will not apply where
you have a deposit accompanied by an actual written charge. In that case you
must refer to the terms of the written document, and any implication that might
be raised, supposing there were no document, is put out of the case and reduced
to silence by the document by which alone you must be governed." In
Subrmonian and anr. v. Lutchman and ors.(4) Lord Carson speaking for the
Judicial Committee stated the law thus:
"The law upon the subject admits of no
In the case of Kedarnath Dutt v. Shamloll
Khettry (5) Couch C. J. said: "The rule with regard to writings (1) 
S.C.R.548. (2) L.R.43 I.A.123.
(3)  L.R. 5 H.L.321, 341. (4)
(5) It Ben. L.R.(O.C.J.)405.
222 is that oral proof cannot. be substitute
for, the written evidence ;of any contract which the parties have put into
writing, And. the reason is that the writing is tacitly considered by the
parties themselves as the only repository and the appropriate evidence of,,
their agreement. If this memorandum was of such a nature that it could be
treated as the contract for the mortgage and what the parties considered to be
the only repository and ,appropriate evidence of their agreement it would he
the instrument by which the equitable mortgage was created, and would come
within section 17 of the Registration Act:" Exhibit A-6 is not registered.
If that document is considered as a contract of mortgage between the Bank and
the depositors, the same having not been registered, it is inadmissible in
evidence. If on the other band that document is considered as a mere memorandum
evidencing the deposit of tide deeds in pursuance of an earlier contract then
the correctness of the recitals therein can be gone into without being
inhibited by ss. 91 and 92 of the Evidence Act. Whichever view is taken the
plaintiffs case must fail. On an overall consideration of the evidence and the
probabilities of the case, we are satisfied that Exhs. A-7 and A-8 were not
deposited with the Bank to secure the debts due from defendant No. I to the
Bank In the result this appeal is allowed, the decree and judgment against the
appellant is set aside and the suit against him is .dismissed with costs throughout.
G.C Appeal allowed.