Rachpal Mahraj Vs. Bhagwandas Daruka
& Ors [1950] INSC 10 (5 May 1950)
SASTRI, M. PATANJALI KANIA, HIRALAL J. (CJ)
DAS, SUDHI RANJAN
CITATION: 1950 AIR 272 1950 SCR 548
CITATOR INFO :
R 1965 SC1591 (7,9) E 1970 SC 659 (8,23) F
1971 SC 613 (17,18)
ACT:
Indian Registration Act (XVI of 1908), s.
17--Transfer of Property Act (IV of 1882), s. 58 (f)--Memorandum of deposit of
title deeds--When compulsorily registrable.
HEADNOTE:
The question whether a memorandum of deposit
of title deeds is compulsorily registrable under section 17 of the Indian Registration
Act, 1908, as an instrument creating an interest in immoveable property,
depends on whether the parties intended to reduce their bargain regarding the
deposit to the form of a document . If so 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,
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 require registration. The
time factor is not decisive.
Where accounts relating to the appellant's
dealings with the respondents were taken on a certain date 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 which stated: "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 and 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
to create an equitable mortgage on the said properties to secure all moneys
including interest that may be found due ...." Held that the parties did
not intend to create 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 not require
registration.
549 Obla Sundarachariar v. Narayana Ayyar (53
I. A, 68) and Hari Sankar Paul v. Kedar Nath Saha (66 I.A. 184) referred to.
APPEAL (Civil Appeal No., LXVII of 1949) from
a Judgment and Decree of the High Court of Judicature at Patna dated the 11th
March, 1947, in F.A. No. 218 of 1944. The material facts appear from the
judgment.
Shiva Prasad Sinha (Sri Kishan, with him) for
the appellant.
B.K. Saran for the 1st respondent.
Respondents 2 to 13 did not enter appearance.
1950. May 5. The judgment of the Court was
delivered by PATANJALI SASTRI J.--This appeal arises out of a suit brought by
the respondents against the appellant and other members of his joint family to
enforce a mortgage alleged to have been created by the appellant by deposit of
title deeds on the 23rd October, 1936, at Calcutta.
The short point for determination in the
appeal is whether the memorandum signed and delivered by the appellant on 23rd
October, 1936, and relied upon by the respondents as evidencing the creation of
the mortgage was compulsorily registrable under section 17 of the Indian Registration
Act, 1908, and, not having been registered, was inadmissible in evidence to
prove the mortgage. The Subordinate Judge of Darbhanga who tried the suit, and
the High Court at Patna on appeal, held that the document did not require registration
and was admissible in evidence, and accordingly decreed the suit.
The question turns on the proper construction
of the memorandum and the circumstances under which it was delivered to the
respondents. According to the evidence of the respondents' witnesses which has
been accepted by the Courts below, the accounts relating to the appellant's
dealings were examined on the 23rd October, 1936, and a large sum was found due
to the respondents who demanded payment. The appellant thereupon brought and gave
certain documents, being 550 title deeds relating to immovable properties
belonging to his family, for the purpose of being held as security for the
amounts then due and to become due on further dealings.
A draft of the memorandum was thereafter prepared
which the appellant took with him to be shown to his lawyer and he returned in
the afternoon, and signed and delivered it to the respondents. All this took
place in Calcutta. The memorandum is in the form of a letter addressed to the
respondents' firm and is in the following terms:
" 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 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 Mallick Lane, relating to our properties at Samastipur 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 ....... " A mortgage by deposit of title deeds is a
form of mortgage recognised by section 58 (f) of the Transfer of Property Act
which provides that it may be effected in certain towns (including Calcutta) by
a person "delivering to his creditor or his agent documents of title to
immovable property with intent to create a security thereon." That is to
say, when the debtor deposits with the creditor the 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
section 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 551 constitutes the
bargain regarding the security, is also necessary and operates to create the
charge in conjunction with the deposit, it 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. The time factor is not decisive. The document
may be handed over to the creditor along with the title deeds and yet may not
be registrable, as in Obla Sundarachariar v. Narayana Ayyar (1). Or, it may be
delivered at a later date and nevertheless be registrable, as in Hari Sankar
Paul v. Kedar Nath Saha (2). 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 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 require registration.
There are numerous decisions, some of them
not easy to reconcile, where this question was considered with reference to the
document concerned in the particular case. It is unnecessary to review them, as
the two latest pronouncements of the Privy Council, to which reference has been
made, aptly illustrate cases falling on either side of the line.
In Obla Sundarachariar v. Narayana Ayyar (1)
a signed memorandum was delivered to the mortgagee along with the title deeds
of certain properties deposited as security. The memorandum stated' 'As agreed
upon in person, I have delivered to you the under-mentioned documents as
security," and listed the title deeds deposited. It was held that the
memorandum was no more than a mere record of the particulars of the deeds and
did not require registration. The criterion applied was: "No such memorandum
can be within the section (section 17 of the Registration Act) unless on its
face it embodies such terms (1) 58 I.A. 68.
(2) 66 I.A.. 184.
S52 and is 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 is concerned, it constitutes the agreement between
the parties." In Hari Sankar Paul v. Kedar Nath Saha (1) the title deeds
were deposited accompanied by a memorandum when part of the advance arranged
for was made. Some days later when the balance was advanced, another memorandum
was delivered superseding the earlier one, and this was a formal document
stating the essential terms of the transaction "hereby agreed" and
referred to the moneys "hereby secured". It also conferred an express
power of sale on the mortgagee. Lord Macmillan, after reviewing the earlier
decisions of the Board, held that the document required registration,
observing, "where, as here, the parties professing to create a mortgage by
a deposit of title deeds contemporaneously enter into a contractual agreement,
in writing, which is made an integral part of the transaction, and is itself an
operative instrument and not merely evidential, such a document must, under the
statute, be registered." Turning now to the memorandum before us, it is
clear, on the face of it, that the parties did not intend thereby to create the
charge. 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 his
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 0the basis of the rights and liabilities of the parties.
In agreement with the High Court, we are of opinion,. that the memorandum
delivered by the appellant along with the title deeds deposited with the
respondents did not require registration and was properly admitted in evidence
to prove the creation of the charge.
The appeal fails and is dismissed with costs.
Appeal dismissed.
Agent for the appellant: Tarachand Brijmohanlal.
Agent for respondent No.1: S. P. Varma.
Back
