SIR HARI SANKAR PAUL, K. T. vs KEDAR NATH SAHA, SINCE DECEASED (NOW REPRESENTED BY SRIMATI JOGEMAYA DASSI

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1939 Supreme(SC) 24

PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD MACMILLAN, LORD ROMER AND SIR GEORGE RANKIN.
SIR HARI SANKAR PAUL, K.T. - Appellant
Versus
KEDAR NATH SAHA, SINCE DECEASED (NOW REPRESENTED BY SRIMATI JOGEMAYA DASSI - Respondents
On appeal from the High Court at Calcutta.
Decided On : Apr. 25. 1939.

Advocates:
Solicitors for the appellants : W. W. Box & Co.
Solicitors for the first respondent: Stanley Johnson & Allen.

Important Points

A memorandum accompanying a mortgage by deposit of title deeds requires registration if it is an operative, contractual instrument embodying the bargain between parties, rather than a mere record of a previously completed transaction.

Subject

Property Law - Mortgages and Registration

Act Referred

ANDHRA PRADESH RULES FRAMED UNDER REGISTRATION ACT: S.49, S.17, S.1(b)

Headnote

(A) Indian Registration Act, 1908 - Sections 17(1)(b) and 49 - Transfer of Property Act, 1882 - Section 59 - Mortgage by deposit of title deeds - Memorandum of agreement accompanying the deposit - Whether the document is a mere record of a completed transaction or an operative instrument creating the security - If the document is contractual in form, embodies the agreement, and is an integral part of the transaction, it requires registration to be admissible in evidence.

(B) Registration of documents - A document that merely records particulars of deeds subject to a deposit does not require registration - However, if the document constitutes the bargain between the parties and is the instrument by which the security is created or defined, it falls within the purview of Section 17 of the Registration Act.

Facts of the case:
A loan was advanced against the security of title deeds of immovable property deposited in a commercial town. Along with the deposit, a formal and elaborate memorandum of agreement was executed, which detailed the terms of the loan, the security, and specifically conferred a power of sale on the mortgagees. This memorandum was not registered. The mortgagees sought to enforce the mortgage based on this document, while the mortgagors contended that the mortgage was unenforceable due to the lack of registration of the memorandum.

Findings of Court:
The memorandum was not merely a record of a transaction already completed but was an operative instrument. It was contractual in form, contained all essentials of the transaction, and embodied the agreement that the title-deeds were to be held as security.

Issues: Whether a memorandum of agreement executed contemporaneously with the deposit of title deeds, which embodies the terms of the loan and confers a power of sale, is a document that operates to create an interest in immovable property and thus requires registration under Section 17(1)(b) of the Indian Registration Act, 1908.

Ratio Decidendi: Where parties creating a mortgage by deposit of title deeds enter into a written contractual agreement that is an integral part of the transaction and is itself an operative instrument rather than merely evidential, such a document must be registered. The test is whether the document constitutes the bargain between the parties or is merely a record of an already completed transaction.

Result: Appeal dismissed.

Legal Category Hierarchy

Judgement

Appeal (No. 80 of 1937) from a judgment and decree of the High Court in its appellate civil jurisdiction (April 6, 1937), which had reversed a judgment and decree of that Court in its ordinary original civil jurisdiction (May 22, 1936).

The question in this appeal was whether a memorandum of agreement, dated August 2, 1924, and made contemporaneously with the deposit of title deeds on the mortgage of certain immovable property in Calcutta, was a document relating to the mortgage transaction of such a nature as to require registration under the provisions of s. 17, sub-s. 1 (b), of the Indian Registration Act (XVI. of 1908), before being admissible in evidence as provided by s. 49 of that Act. It was contended by the mortgagors that the document should have been registered, and that failure to do so rendered the mortgage unenforceable under s. 49 of the Act.

For the appellants, the mortgagees, it was contended that, under s. 59 of the Transfer of Property Act

(IV. of 1882), an effective mortgage was created by the deposit of the title deeds.

The Indian Registration Act, 1908, provides by s. 17, sub-s. 1 " The following documents shall be registered .... "(b) other non-testamentary instruments which purport or "operate to create, declare, assign, limit or extinguish, whether "in present or in future, any right, title, or interest, whether "vested or contingent of the value of one hundred rupees and "upwards, to or in immovable property ; . . . . "

By s. 49 "No document required by s. 17 (or by any "provision of the Transfer of Property Act, 1882) to be "registered shall—(a) affect any immovable property comprised therein.....(c) be received as evidence of any transaction affecting such property or conferring such power, unless "it has been registered....."

By the proviso to s. 59 of the Transfer of Property Act, 1882 " Nothing in this section shall be deemed to render "invalid mortgages made in the towns of Calcutta .... by "delivery to a creditor or his agent of documents of title to "immovable property with intent to create a security "thereon."

The facts and the terms of the memorandum of agreement appear from the judgment of the Judicial Committee.

The trial judge (Lort-Williams J.) was of opinion that the memorandum was nothing but " a record of what had been "agreed to orally," and was not " a document containing the "bargain made between the parties,” and did not require te bo registered.

On appeal the Appellate Court (Costello and Panckridge JJ.) held that the memorandum of agreement was of such a character as called for registration. The appeal is reported at I. L. R. [ 1937] 2 C. 586.

1939. March 13, 14. A. M. Dunne K.C. and J. M. Pringle for the appellants. The question turns on the terms of a document which was executed after a mortgage by deposit of title-deeds had been made by the appellants. It has been held that because this memorandum subsequently executed was not registered the appellants cannot get the benefit of their mortgage. The point is whether the document which has been held not to be admissible in evidence because it was not registered was one which effected a mortgage, or whether it was a mere record of the previous mortgage by deposit of title-deeds. It is submitted that the real effective meaning of the transactions in question was, first, that there was a deposit of title-deeds to secure loans which the appellants made in praesenti and in future, and that that is covered as an effective mortgage under s. 59 of the Transfer of Property Act, No. IV. of 1882, as it stood at the time of the execution of the memorandum of August 2, 1924. Sect. 59 provided that "Nothing in this section shall be deemed to render invalid "mortgages made in the towns of Calcutta .... by delivery "to a creditor or his agent of documents of title to immovable " property with intent to create a. security thereon." Secondly, the memorandum which was afterwards drawn up really dealt only with the matter of the method of

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