A mortgage by deposit of title deeds can be created without a written contract. The intention to create security can be inferred from the circumstances of the case.

V. BHASKARA RAO, J.

( 1 ) THE plaintiff in O. S. No. 64 of 1992 on the file of the subordinate Judge s court, Nellore, preferred this revision questioning the order dated 25-3-1992 ordering that a simple money suit only is maintainable and therefore to register the suit filed by the plaintiff accordingly. t

( 2 ) THE averments in the said suit were that the defendant borrowed Rs. 15,000 / - on 16-5-1991, Rs. 15,0007- on 20-5-1991 and another stn of Rs. 50,000/- on 16-12-1991 from the plaintiff for his necessities arid executed three pronotes. The plaintiff while leading the sum of Rs. 50,000/- on 16-12-1991 insisted for security and the defendant delivered the titled deeds relating to the suit schedule property to the plaintiff with the intention of creating security for repayment of the total amount due under the promissory notes. As thedefendant failed to repay the amounts as agreed, the suit is filed for directing the defendant to deposit the amount due and if the defendant fails to deposit, to pass a final decree in favour of the plaintiff to bring the plaint schedule properties to sale to recover the entire amount with interest and costs. The plaint was returned by the Court as not maintainable in the absence of a written contract as to the intention to create security by depositof the title deeds- The plaintiff represented the same stating that Section 58 (f) of the Transfer of Property Act contemplates that mere delivery of title deeds creates security for the debt. The Court ultimately passed on order on 25-3-1992 stating that since there is no contract in writing to show that the title deeds were handed over with an intent to create security, a simple money suit alone is maintainable and directed the office to register the suit accordingly. The same is questioned in this revision.

( 3 ) LEARNED Counsel for the petitioner contends that the Court below erred in holding even before registration of the plaint, that the suit for decree for the sale of the mortgaged property for recovery of the amount due to him, is not maintainable and the same is maintainable only as a simple suit for recovery of money. He further contends that even in the absence of a written document or memorandum, mere delivery of title deeds amounts to creating security. Counsel for the respondent, on the other hand, contends that written memorandum is essential showing the intent to create security thereon and in the absence of such written. document, the transaction is not called a mortgage by deposit of title deeds.

( 4 ) SECTION 58 (f) of the Transfer of Property Act reads as follows: (f) Mortgage by deposit of title-deeds:- Where a person in any pf the following towns, namely, the towns of Calcutta, Madras and Bombay and in any other town which the State Government concerned may, by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent documents of title to immovable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds.

( 5 ) DEALING with the same controversy, the Supreme Court in United Bank of india Ltd, Appellant vs. Lekharam Soharam and Co. and others, Respondent1 held as und^r: when the debtor deposits with the creditor title deeds of his property with an 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 classes of mortgage. It is essential to bear in mind that the essence of a mortgage by deposit of title deeds is the actual handing over by a borrower to ^e lender of documents of title to immovable property with an intention mat these documents shall constitute a security which will enable the creditor ultimately to recover the money which he has lent. In K. J. Nathan, Appellant vs. S. V. Maruthi Rao and others, Respondents2 the supreme Court observed as follows: under the Transfer of Property Act a mortgage by deposit of t

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