The main legal point established in the judgment is the legal requirements and implications of mortgage by deposit of title deeds, including the necessity of registration and the liability of subsequent purchasers.

( 1 ) THE appellant, Ishwar Das Malhotra, filed a suit for recovery of Rs. 17. 500. 00 based on the mortgage of two properties. Dhanwant Singh, defendant No. 1 (respondent No. 1 herein) was the person stated to have taken loans from the plaintiff-appellant on the basis of these mortgages while defendants-respondents Nos. 2 to 5 were the persons who had allegedly purchased the mortgaged properties subsequently. The suit of Malhotra was decreed but only against defendant No. I, Dhanwant Singh, and his suit as against defendants Nos. 2 to 5 was dismissed with costs. It was held that Dhanwant Singh was not competent to mortgage one property and as regards the other property no mortgage was enforceable. Malhotra was also awarded interest at the rate of 6% per annum and not at 7% per annum as claimed by him. Aggrieved, Malhotra has appealed to (his court.

( 2 ) THE two mortgaged properties are. (1) house No. J-6/87 Rajouri Garden, New Delhi, and (2) house No. j-7/24, Rajouri Garden, New Delhi. At the relevant time property No. J-6/87 was a plot of land and was owned by Dhanwant Singh who, by asale deed dated 11-3-1966, sold the same to Smt. Indrawati, respondent-defendant No. 2. The sale deed was registered on 17-3-1966. Smt. Indrawati constructed a single storeyed house thereon and sold the same to respondents-defendants Nos. 3 and 4, namely, Smt. Basant Kaur and Smt. Harbans Kaur, respectively by a sale deed dated 10-10-1966. Incidentally, it may be noted, during the pendency of the present appeal Smt. Basant Kaur died and her legal heirs were brought on record. Reference to Smt. Basant Kaur would therefore, mean reference to her legal representatives.

( 3 ) PROPERTY No. J-7/24, at that time was asingle store) ed house and " was owned by Smt. Indrawati. She sold this house along with the plot to Dhanwant Singh on 11-3-1966, and the sale deed was also registered on the same date. Dhanwant Singh, in turn, sold this property to Harjeet Singh Dhanjal, respondent-defendant No. 5 by a sale deed dated 5-6-1975.

( 4 ) THE case of Malhotra is that on 18-5-1966 Dhanwant Singh took a loan of Rs. 8500. 00 with interest at the rate of 7% per annum from him and executed a pronote and also deposited title deeds of the aforesaid two properties with him as security for repayment of the amount . Later on the same date, Dhanwant Singh also gave a memorandum in writing regarding deposit of the titlle deeds to Malhotra. This memorandum is Ex. P-2 and is the subject matter of considerable controversy between the parties. Dhanwant Singh took a further loan of Rs. 4500. 00 from Malhotra on 20-5-1967 and executed a pronote for Rs. 13,000. 00 which include the loan of Rs. 8500. 00 which had been advanced to him by Malhotra earlier. The title deeds were agreed to be kept as security for this loan of Rs. 4500. 00 as well Again on 4-5-1971 Dhanwant Singh took yet another loan of Rs. 3000. 00 from Malhotra and executed a consolidated pronote of Rs. 16. 000. 00 and allowed the title deeds to be kept with the plaintiff as security for this loan as well. It was stated by Malhotra that Dhanwant Singh bad paid him interest upto 3-5-1971 and he also received a further sum of Rs. 3900. 00 from Dhanwant Singh as interest on different occasions. A sum of Rs. 1500. 00 towards interest remained due to Malhotra from defendant Dhanwant Singh on the date of the institution of the suit apart from the principal amount of Rs. 16000. 00.

( 5 ) A perusal, of the facts narrated above would show that property No. J-6/87, bad already been sold by Dhanwant Singh to Smt. Indrawati when Dhanwant Singh is stated to have deposited the title deeds of this property with the plaintiff Malhotra. Since Dhanwant Singh was not having any legal title to this property, he could not create any mortgage by means of deposit of title deeds of this property or otherwise. Malhotra has alleged that there was a collusion between Dhanwant Singh and Smt. Indrawati. Otherwise, he claime