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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 Act, 1872. =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 bargain: 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., [1950] 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 Subramonian =1971 AIR 1613, 1971Suppl.SCR 209, , ,

PETITIONER:

The Andhra Pradesh High Court in Hyderabad.

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VEERAMACHINENI GANGADHARA RAO

Vs.

RESPONDENT:
ANDHRA BANK LTD. ORS.

DATE OF JUDGMENT25/03/1971

BENCH:
HEGDE, K.S.
BENCH:
HEGDE, K.S.
GROVER, A.N.

CITATION:
1971 AIR 1613 1971 SCR 209
ACT:
Indian Registration Act, 1908, s. 17-Mortgage by deposit of
title deedsDocument 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 Act, 1872.

HEADNOTE:
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 bargain:
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., [1950] 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 Subramonian
JUDGMENT:
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 pro-
ceeding 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 1969.
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 Re-
finers 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 appli-
211
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
become final.
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 hereunder”.
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 they-
refrained 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 Director- of 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
dedeposited and requested that the loan might
be granted. Under Ex. A-67 loan of Rs.
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 parties”.
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 con-
sideration reads as follows:
“Loans.and Overdrafts:
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.
Resolution:
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 originals.
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 ready made 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 close.
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 sanctioned.
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., Masulipatam.
Sir,
Sub: Over Draft Facility granted to me.
With reference to the over draft 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 over draft
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 keyloan
account granted to Godavary Sugars ‘and
Refiners Ltd.
I shall be obliged for immediately allowing
‘me to draw the amount.
Thanking you.
Yours faithfully,
Sd/- Illegible.”
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
amicablesettlement 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.,
Masulipatam.
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 the. 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.
———————————————————–
Name and Address:
Yours faithfully
Sd./-1. Veeramanchaneni Gangadhara Rao
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, Vijayawada Town.
———————————————————–
220
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 can not 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) [1950] S.C.R. 548.
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
require registration.
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 wellestablished 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 doubt.
In the case of Kedarnath Dutt v. Shamloll
Khettry (5) Couch C. J. said: “The rule with
regard to writings
(1) [1950] S.C.R.548. (2)
L.R.43 I.A.123.
(3) [1872] L.R. 5 H.L.321, 341. (4)
51),I.A.77.
(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.
223

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