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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. = 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 mort- gage 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 appel- lant 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 ad- dressed 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 relat- ing to our properties at…with intent to create an equita- ble 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. =1950 AIR 272, 1950SCR 548, , ,

PETITIONER:

English: Mortgage debt

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RACHPAL MAHRAJ

Vs.

RESPONDENT:
BHAGWANDAS DARUKAand OTHERS

DATE OF JUDGMENT:
05/05/1950

BENCH:
SASTRI, M. PATANJALI
BENCH:
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 mort-
gage 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 appel-
lant 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 ad-
dressed 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 relat-
ing to our properties at…with intent to create an equita-
ble 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.

JUDGMENT:
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 appel-
lant.
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 deliv-
ered 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 follow-
ing title deeds in Calcutta at your place of business at No.
7 Sambhu Mallick Lane, relating to our properties at Samas-
tipur 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 par-
ties choose to reduce the contract to writing,the implica-
tion 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 up-
wards. 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 docu-
ment, 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 memo-
randum 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 deliv-
ered 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 crite-
rion 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 accompa-
nied 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 intend-
ing 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
(1) 66 I.A. 184.
553
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.

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