Back
1931 Supreme(SC) 56
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD BLANESBURGH, LORD TOMLIN, AND SIR JOHN WALLIS.
PAPIAH NAIDU (DEFENDANT NO. 2) - Appellant
Versus
NAGANATHA SETHUPATHI - Respondents
On Appeal from the Court of the Resident in Mysore.
Decided On : June 4. 1931.
Solicitors for appellant:T. L. Wilson & Co. Solicitor for respondent: H. S. L. Polak.
Mortgages created by the deposit of title deeds in specified towns are exempt from registration requirements under Section 59 of the Transfer of Property Act. The onus of proving the invalidity of such mortgages rests on the party challenging them, not on the party relying upon them.
Headnote:(A) Transfer of Property Act, 1882 - Section 59 - Mortgage by deposit of title deeds - Validity and applicability - The saving clause in Section 59, which exempts mortgages created by delivery of title deeds in specified towns from the requirement of a registered instrument, is applicable to territories where the Act has been extended by notification, provided the transaction occurred in one of the specified towns. The phrase "in so far as the same may be applicable" in a notification applying the Act does not authorize courts to treat provisions as inapplicable on questionable grounds of legislative policy. (Paras 12-14)
(B) Onus of Proof - Where the law codifies the transfer of immovable property and expressly exempts mortgages by deposit of title deeds in specified places from certain formalities, the onus lies on the party challenging the validity of such a mortgage to establish its invalidity, rather than on the party relying on it to prove its validity independently of the Act. (Paras 17-21)
Facts of the case:
A borrower obtained loans from a lender in a specified town and deposited title deeds of properties located in a different territory as security. A third-party creditor, who had attached the properties in execution of a money decree, challenged the validity of the mortgage, arguing that the deposit of title deeds in the specified town did not create a valid equitable mortgage for properties situated in the territory.
Findings of Court:
The court found that the saving clause of Section 59 of the Transfer of Property Act was applicable to the territory in question. It held that the mortgage created by the deposit of title deeds in the specified town was valid and that the appellant failed to discharge the onus of proving its invalidity.
Issues: Whether the saving clause to Section 59 of the Transfer of Property Act, exempting mortgages by deposit of title deeds in specified towns, was applicable to the territory and whether such a clause validates the mortgage or merely shifts the onus of proof.
Ratio Decidendi: The court reasoned that the legislative intent was to apply the Act as a whole unless specifically modified. Since the Act does not prohibit mortgages by deposit of title deeds and specifically exempts them from registration formalities when made in specified towns, such transfers are recognized. The onus of proving invalidity rests with the challenger, as the Act provides a framework that recognizes these transfers in specified locations.
Result: Appeal dismissed with costs.
Legal Category Hierarchy
-
property law
-
mortgages
- equitable mortgages
-
mortgages
-
statutory interpretation
- application of laws to territories
-
conflict of laws
- lex loci rei sitae
Judgement
Appeal (No. 70 of 1930) from a decree of the Court of the Resident in Mysore, Bangalore (July 14, 1928) reversing a decree of the District Judge, Civil and Military Station, Bangalore (November 12, 1925).
The above named respondent instituted a suit in the Court of the District Judge against a defendant, who was a pro forma respondent to the present appeal, claiming a simple decree for money lent at Madras, and in default of payment the sale of properties in the Civil and Military Station, the documents of title of which he alleged had been deposited as security. The original defendant admitted the claim, but the present appellant, a creditor of his who had attached the properties, having obtained an order adding him as a defendant disputed that the deposit at Madras created a mortgage or entitled the plaintiff to a decree for sale.
The trial judge made a simple money decree, but dismissed the claim for a sale decree. An appeal to the Court of the Resident was allowed and a mortgage decree was made. The grounds of the decisions appear from the judgment of the Judicial Committee.
1931. April 30; May 1. De Gruyther K.C. and E. B. Raikes K.C. for the appellant.
Dunne K.C. and Narasimham for the respondent.
June 4. The judgment of their Lordships was delivered by
SIR JOHN WALLIS. This is an appeal from a judgment of the Court of the Resident in Mysore at Bangalore reversing a judgment of the District Judge of the Civil and Military Station of Bangalore, and decreeing the plaintiffs suit on a mortgage of immovable properties in Bangalore effected by deposit of title deeds in Madras. The question is whether such a mortgage is valid.
The Civil and Military Station is an area within the territory of the Mysore State, as to which plenary jurisdiction has been transferred by treaty to the British Government, and is governed by the Indian (Foreign Jurisdiction) Order in Council of June 11, 1902, made under the Foreign Jurisdiction Act, 1890. Clause 4 empowers the Governor-General of India in Council to make rules and orders for territories such as this " (a) for determining the law and procedure to be observed, whether by applying with or without modifications all or any of the provisions of any enactment in force elsewhere, or otherwise."
A notification of the Government of India of January 16, 1917, made under the aforesaid Order in Council and in supersession of an earlier notification, contains a lengthy schedule of British Indian enactments which are declared to apply to the Civil and Military Station of Bangalore " in so far as the same may be applicable thereto," and subject to any amendments for the time being in force in British India.
References in such enactments to British India are to be read as referring to the Civil and Military Station. No. 37 is the Transfer of Property Act IV. of 1882.
The notification contains a further proviso to the effect that the enactments in question are to be applied mutatis mutandis to the Civil and Military Station " Provided, first, that in the enactments as so applied except where the context or the modifications hereinafter referred to otherwise require, references to a Local Government, the Chief Commissioner, the Chief Controlling Revenue Authority or the Chief Revenue Authority shall be read as referring to the Resident in Mysore ; references to a Secretary to a Local Government as referring to the First Assistant to the Resident in Mysore ; references to a High Court as referring to the Court of the Resident in Mysore ; and references to British India or the territories subject to a Local Government as referring to the said Civil and Military Station of Bangalore
" Provided, secondly, that the further modifications and restrictions set forth in the said schedule shall be made in the said enactments as so applied
" Provided, thirdly, that for the purpose of facilitating the application of the said enactments, any Court in the said Civil and Military Station of Bangalore may con
