Dama Seshadri Naidu, J.

Introduction:

1. Two persons borrow money from a bank by depositing their title deeds as security. They register the transaction. The loan satisfied, the borrowers want the title deeds back. The banker and the borrowers execute a deed of cancellation and present it for registration. The Registration Department wants to treat the cancellation deed either as a reconveyance or as a deed relating to deposit of title deeds—exacting higher stamp duty.

2. The questions to be answered are these: (a) Does the cancellation deed amount to “an agreement relating to deposit of title deeds” under Article 6 of the Schedule to the Kerala Stamp Act? Or (b) does the cancellation deed “reconvey the mortgaged property” attracting stamp duty under Article 47 of the same Schedule?

Facts in Brief:

3. In this writ appeal, the State assails the judgment dated 11.8.2017 in W.P.(C)No. 21855/17.

4. The respondents 1 and 2 obtained a loan from the third respondent Bank and deposited their title deeds as security. This offering of security is technically termed 'mortgage by deposit of title deeds'—an equitable mortgage. Though simple handing over the title deeds would suffice, the banker and the borrowers felt it desirable to have some record of the transaction: the deposit of the title deeds. They registered it, paying stamp duty under Article 6 of the Schedule to the Stamp Act (“the Act”).

5. Later, the loan satisfied, the borrowers wanted the title deeds back. For that purpose, again the bank and the borrowers executed a deed cancelling the memorandum of depositing the title deeds and presented it for registration.

6. Initially, the Registration Department insisted that the cancellation amounts to re-conveyance and the stamp duty be paid under Article 47 of the Schedule to the Act. In the alternative, the Department also insisted that it could be, in the least, under Article 6 of the Schedule to the Act.

7. Aggrieved, the respondents 1 and 2 filed W.P.(C)21855 of 2017, which the learned Single Judge allowed through the impugned judgment, dated 11th August 2017. The learned Single Judge, in fact, held that the borrowers are required to pay the stamp duty under Article 15 of the Schedule to the Act. This time, it is the State’s turn to come before us with this writ appeal.

Submissions:

The Appellant’s:

8. Sri K.V. Sohan, the learned State Attorney, has strenuously contended that it is an agreement contemporaneously recording the transaction of mortgage; as such, both its creation and nullification fall under Article 47. In the alternative, he has contended that it must be under Article 6, for the cancellation concerns, or relates to, a mortgage.

The Respondents 1 & 2:

9. Sri D. Kishore, the learned counsel for the respondents 1 and 2, placing reliance on South Indian Bank Ltd. v K.P. Ramachandran (2017 (2) KHC 705), has contended that the very memorandum requires no registration. So it attracts no stamp duty, either. He has nevertheless contended that for a deed cancelling a registered document the parties should pay the stamp duty only under Article 15 of the Act.

10. Heard Sri K. V. Sohan, the learned State Attorney and Sri D. Kishore, the learned counsel appearing for the respondents 1 and 2, besides perusing the record.

Discussion:

11. To begin with, section 58 of the Transfer of Property Act defines the expressions employed in a mortgage transaction. Clause (a) defines a mortgage as the transfer of an interest in specific ‘immovable property for securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. Clause (f) of that section defines ‘Mortgage by deposit of title-deeds’: “Where a person . . . 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.”

12. Section 59 of the Transfer of P