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1922 Supreme(SC) 73
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD ATKINSON, LORD SUMMER, LORD PARMOOR, LORD CARSON, AND MR. AMEER ALI.
SUBRAMONIAN - Appellant
Versus
LUTCHMAN - Respondents
On Appeal from the Chief Court of Lower Burma.
Decided On : Dec. 20. 1922
Solicitors for appellants: Stoneham & Sons.
Solicitors for respondent No. 10: Sandersons & Orr Dignams.
When title deeds are deposited with a written bargain, the document governs the security; if it is the contract, registration is mandatory. Additionally, a receiver cannot mortgage partnership property without court sanction.
Headnote:(A) Indian Registration Act, 1908 - Sections 17 and 49 - Indian Evidence Act, 1872 - Section 91 - Equitable mortgage by deposit of title deeds - Where title deeds are handed over accompanied by a written bargain, the written bargain rules and determines the scope and extent of security - If the written memorandum constitutes the contract for the mortgage, it is the instrument by which the equitable mortgage is created and must be registered under Section 17 of the Registration Act - Oral proof cannot be substituted for written evidence of a contract which the parties have put into writing. (Paras 15-20)
(B) Receiver - Power to mortgage - A receiver appointed to take charge of property, collect outstandings, and realize and preserve assets does not have the inherent power to create mortgages of the partnership property without the sanction of the Court. (Paras 14, 22)
Facts of the case:
A plaintiff claimed an equitable mortgage based on the deposit of title deeds and a signed memorandum. Subsequently, a receiver appointed for the firms that had deposited the deeds deposited a new legal mortgage and title deeds as collateral security for debts owed to the plaintiff. The plaintiff sought to enforce the mortgage against the properties.
Findings of Court:
The court found that the memorandum accompanying the original deposit of title deeds was the actual bargain between the parties and not merely a record of a completed transaction. Consequently, the document required registration. Additionally, the receiver lacked the authority under the appointment order to create mortgages of the partnership property.
Issues: Whether the memorandum of deposit constituted the contract between the parties requiring registration under the Registration Act, and whether the receiver had the authority to create a mortgage of the partnership property.
Ratio Decidendi: When title deeds are deposited with a written charge, the terms of the written document govern the transaction, and any implications that would arise from a simple deposit without writing are excluded. If the document is the contract, registration is mandatory. Furthermore, the powers of a receiver to preserve assets do not extend to creating mortgages without court leave.
Result: Appeal dismissed with costs.
Legal Category Hierarchy
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property law
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mortgages
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equitable mortgages
- deposit of title deeds
- legal mortgages
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equitable mortgages
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mortgages
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practice and procedure
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evidence
- admissibility of oral evidence
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registration
- registration act
-
evidence
-
civil law
-
partnership
- receiver's powers
-
partnership
Judgement
Appeal (No. 203 of 1919) from a judgment and two decrees of the Chief Court in its appellate jurisdiction (January 24, 1916) reversing a decree of Young J. (August 25, 1914).
The suit was brought in the Chief Court of Lower Burma by Mallady Sathalingum, since deceased, and represented by the appellants, his executors, against the respondents, of whom Nos. 1 to 8 had been members of two dissolved firms of Chettys, No. 9 was the receiver appointed in the dissolution proceedings, and No. 10 was one Ebrahim Seedat. The claim was to enforce a mortgage dated August 26, 1910, against the respondents; a claim upon the personal remedy was abandoned.
The facts of the case appear from the judgment of the Judicial Committee.
The trial judge (Young J.) held that the receiver had no power to create the mortgage, without the sanction of the Court, save so far as it related to properties included in a prior equitable mortgage. He made a decree accordingly.
Upon cross-appeals to the appellate jurisdiction the suit was dismissed. The learned judges held that the receiver had no power to mortgage; they therefore did not find it necessary to consider whether the prior equitable mortgage was invalid for want of registration.
1922. Oct. 31; Nov. 2, 6. Powell K.C, Preedy and Dube for the appellants. If the mortgage of 1910 was invalid, the plaintiffs can still rely upon the equitable mortgage of 1908. The equitable mortgagee was throughout entitled to call for a legal mortgage Carter v. Wake . (( 1877) 4 Ch. D. 606.) Equity will not presume an intention to abandon that right upon the new mortgage being given Locking v. Parker (( 1872) L. R. 8 Ch. 30, 38.); Kehoe v. Hall (( 1843) 5 Ir. Eq. 597.); Fisher on Mortgages, 6th ed., §§ 1559, 1560. That principle has been applied in India Gokuldoss Gopaldoss v. Rambux Sheochand (( 1884) L. R. 111. A. 126.); Arumugam Pillai v. Periasami (( 1896) I. L. R. 19 M. 160.); Ghose on Mortgages, p. 550. The transaction was completed by the deposit; there was no necessity to register. It is further submitted that the receiver had authority from Seedat to deposit the deeds, apart from his powers under the order appointing him.
Dunne K.C. and Kenworthy Brown for the respondent. It is clear that the receiver had no power to create the mortgage of 1910. The mortgage of 1910 cannot be proved in the absence of registration. The document drawn up embodied the terms of the agreement between the parties, consequently no oral evidence was admissible under s. 91 of the Evidence Act, and registration was necessary under s. 17 of the Registration Act Kedarnath Dutt v. Shamloll Khettry (( 1873) 11 Ben. L. R. (O. C, J.) 405.); Dwarkanath v. Sarat Kumari (( 1871) 7 Ben. L.R.(O.C.J.) 55.) ; Esther Isac v. Martu Mall (( 1916) 25 Cal. L. J. 160.); Bhoibrab Chandra v. Anath Nath . (( 1920) 31 Cal. L. J. 375.) Further, the memorandum required stamping under the Indian Stamp Act (II. of 1899) amended by Act XV. of 1904, s. 8, Sch. I. (6.). [Reference was also made to Pranjivandas Mehta v. Chan Ma Phee (L. R. 43 I. A. 122.) and Credland v. Potter . (( 1874) L. R. 10 Ch. 8.)]
Powell K.C. in reply. The charge in 1908 was created by the deposit, not by the document.
Dec. 20. The judgment of their Lordships was delivered by
LORD CARSON. On July 15, 1908, the firms of Chettys owed to the original plaintiff, Mallady Sathalingum, whose executors the present appellants are, a considerable sum of money, and as security for the same deposited with him by way of equitable mortgage title deeds relating to certain properties of the defendant Seedat, which deeds had been deposited with the said firm by the said Seedat. On the occasion of the deposit a memorandum was signed and delivered to the said plaintiff in the following terms—
"From M. L. R. M. A. Soliappa Chetty and A. L. A. S. R. M. Chetty, Rangoon. To Mallady Sathalingum, Rangoon.
Dated Rangoon, July 15, 1908. "Dear Sir,
"We hand you herewith title deeds relating to fifth class Lot, N
