Judgement

Consolidated Appeals (Nos. 148 and 149 of 1920) from seven judgments and decrees of the Chief Court of Lower Burma (May 6, 1918), modifying, as to No. 148, and affirming, as to No. 149, decrees of the District Judge of Akyab.

Law Rep. 50 Ind. App. 283 ( 1922- 1923) Imperial Bank of India V. U Rai Gyaw Thu and Company Limited 94

The main question arising in the appeals was whether in respect of certain advances made by the Bank of Bengal (now represented by the appellant bank) at Akyab on the security of a previous deposit by the borrowers of the documents of title of immovable property the bank was entitled to priority over registered mortgages executed in favour of the respective respondents before the advances in question were made but after the deposit with the bank.

The material facts appear from the judgment of the Judicial Committee.

The deposit in appeal No. 148 was of the documents of title of parcels of land in Pauktaw township being in all of about 304 acres. The borrower signed a letter, in the terms set out in the judgment, making the documents collateral security for advances made or to be made to him; the letter was not registered. In appeal No. 149 the deposit was of the documents of title of lands at Myohaung, where the borrower resided, which was stated to be five or six hours by river launch distant from Akyab ; the borrower signed no document upon depositing the documents with the bank. In both appeals the mortgages executed in favour of the respective respondents were duly registered.

In the suits to which appeal No. 148 related the District Judge held that registration of the respondent companys mortgage of June 1, 1914, was not notice to the bank. He made, as prayed by the plaintiff bank, mortgage decrees in respect of advances made by it in 1916, declaring that the mortgage to the bank was entitled to priority over the mortgage to the respondent company. On appeal to the Chief Court the decrees were modified by declaring that the bank was entitled to priority over the respondent companys mortgage only to the extent of Rs. 16,000, being the minimum amount due to the bank after June 1, 1914, and interest thereon, with consequent directions as to marshalling.

In the suits to which appeal No. 149 related the District Judge by his decrees gave the respondents priority in respect of their registered mortgage of May 1, 1914, over advances made by the bank after that date. On appeal the decrees were affirmed.

1923. March 5, 6, 8, 12, 13, 15. Micklem K.C., De Gruyther K.C., and Draper for the appellants. The mortgages by deposit with the bank were prior in date to the mortgages to the respondents ; the bank was therefore entitled prima facie to priority in respect of the advances by s. 48 of the Transfer of Property Act, 1882. Under that Act there is no distinction between a mortgage by deposit of documents of title made in one of the towns mentioned in s. 59. as amended by Act VI. of 1904 to include Akyab, and a mortgage by a written instrument. The place where a contract of mortgage by deposit is made, not the situation of the land, is the test of validity under s. 59 Srinath Roy

v. Godadhur Das. (( 1897) I. L. R. 24 C. 348.) It was not suggested below that the letter accompanying the deposit in appeal No. 148 required registration; the respondents cannot now raise that contention or rely upon the subsequent decision of the Board in Subramonian v. Lutchman. (( 1922) L. R. 50 I. A. 77.) Sect. 79 of the Transfer of Property Act, 1882, recognizes the validity in India of a mortgage covering future advances, and, with regard to cases in which a maximum sum is expressed, overrides the law in England as laid down in Hopkinson v. Rolt. (( 1861) 9 H. L. C. 514.) The section however is not exhaustive. The appellants priority under s. 48 is not excluded by s. 80. The words in that section "except in the case provided for by s. 79 "mean" except in the case of a subsequent advance under a prior mortgage"; the exc