Mortgage by deposit of title deeds is considered an arrangement under which security interest is created in favor of the secured creditor and does not require registration under the Securitisation and Reconstruction of Financial Assets and Investment of Security Interest Act, 2002.

Soumitra Pal, J.

1. In the writ petition, the petitioners have prayed for a direction upon the Authorized Officer, Allahabad Bank, Zonal Office, the respondent no.2, to consider the representation dated 20th January, 2015 in accordance with the guidelines framed by the Reserve Bank of India. Prayer has also been made for declaring the property in question as not a "secured asset" as no security interest has been created in terms of the Securitisation and Reconstruction of Financial Assets and Investment of Security Interest Act, 2002 (for short 2002 Act'). Challenge is also to the notices issued by the said respondent no.2 under the 2002 Act.

2. Relying on the definition of "Security Agreement", "Secured Debt" and "Security Interest" under the 2002 Act, it is submitted on behalf of the petitioner that since interest was created by deposit of title deeds and since there was no registration, in view of the provisions contained in the Transfer of Property Act, 1882, the Registration Act, 1908 as well as under the 2002 Act, the respondent authorities cannot proceed under the 2002 Act. Moreover, in an unregistered mortgage by deposit of title deeds, the respondent authorities cannot proceed under the provisions of the 2002 Act. In support of his submission, learned advocate for the petitioners has relied on the judgments of the Supreme Court in Rachpal v. Bhagwandas: AIR 1950 SC 272, in United Bank of India v. Lekharam S. & Co.: AIR 1965 SC 1591, in V.G. Rao v. Andhra Bank: AIR 1971 SC 1613, in Standard Chartered Bank v. V. Noble Kumar: (2013) 9 SCC 620 and in State of Haryana v. Navir Singh : 2014(4) WBLR 561.

3. Learned advocate appearing on behalf of the respondents submits that it is evident that Parliament while enacting the 2002 Act had kept in mind the provisions contained in the Transfer of Property Act and the Registration Act. The definition of "Security Agreement" is wide enough to encompass not only an agreement or instrument but also any other document or arrangement, including creation of mortgage by deposit of title deed under which security interest is created in favour of the secured creditor. Submission is 'security interest', as defined in section 2 (zf) of the 2002 Act, also brings into its ambit the right, title and interest whatsoever in any kind of property in favour of the secured creditor including any mortgage, charge or hypothecation. Moreover, under the Transfer of Property Act, in Kolkata, a Presidency town, mortgage by deposit of title deeds requires no registration. The learned advocate for the respondents has relied on the judgment of the Hon'ble Supreme Court in Kehar Singh v. Delhi Administration: AIR 1988 SC 1883, particularly paragraph 227 thereof, in support of his submission.

4. In the instant case, admittedly the petitioners had availed case credit facility from the respondent bank by deposit of title deeds. Now, the question is whether it requires registration as contended on behalf of the petitioners. Before embarking to answer the issue, it is relevant to refer sections 2(zb), 2(ze) and 2(zf) of the 2002 Act, which are as under:

Section 2(zb):

"security agreement" means an agreement, instrument or any other document or arrangement under which security interest is created in favour of the secured creditor including the creation of mortgage by deposit of title deeds with the secured creditor;

Section 2(ze):

"secured debt" means a debt which is secured by any security interest;

Section 2(zf):

"security interest" means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in section 31"

5. It is evident that "Security Agreement" brings within its scope and ambit not only an agreement or instrument or document which may be registered but also significantly "any other document or arrangement" under which security interest is created in favour of the secured cr