A document creating mortgage rights by its own terms of disposition, though the deposit of title deeds is referred to at the outset, is a deed of mortgage falling under Art. 40(b) of Sch. I of the Indian Stamp Act.

M. ANANTANARAYANAN, Offg. C.J. :- On the 29th October 1957, a document, which purports to be a memorandum of mortgage by deposit of title deeds, came into existence as between the Jawahar Mills Ltd., Salem and the Indian Overseas Bank Ltd. The document was presented for registration on 30-10-1957, and it bore stamps under Art. 6 of Sch. I of the Indian Stamp Act. The question referred to us for decision is, whether this is an agreement relating to the deposit of title deeds, pawn or pledge, falling under Art. 6(2)(a) of Sch. I, or is a mortgage deed falling under Art. 40(b) of the same Schedule of the Indian Stamp Act.

2. Before proceeding to the details of the recitals in this document, which has two schedules of properties attached, namely, schedule A and Schedule B, it may be useful to briefly refer to certain relevant provisions of the Indian Stamp Act, 1899, the Indian Registration Act and the Transfer of Property Act. Section 2(17) of the Stamp Act is an inclusive definition of a deed of mortgage, and, by its terms "includes every instrument whereby, for the purpose of securing money advanced, or to be advanced, by way of loan, or an existing or future debt, or the performance of an engagement, one person transfers, or creates to, or in favour of, another a right over or in respect of specified property".

Article 6 of Sch. I is entitled "agreement relating to the deposit of title deeds, pawn or pledge" and 6(2)(a) would be the relevant category, if the agreement in the present instance dated 29-10-1957, is not to be construed as one falling under Art. 40(b) of Sch. I. Article 40 (b) of Sch. I relates to a mortgage deed, not being an agreement relating to deposit of title deeds, pawn or pledge (Art. 6), when possession is not given or agreed to be given by the mortgagor. Section 17 of the Registration Act sets forth the categories of documents in respect of which registration is compulsory. Section 58 of the Transfer of Property Act deals with kinds of mortgages recognised by law, and under Section 58(f), a mortgage could be created by deposit of title deeds with regard to immoveable property, in specified towns, it is not in dispute that Salem Town has been notified, as a town in which such a transaction could validly take place.

Under Section 8 of the Transfer of Property Act, and the relevance of this will be later apparent, where the property transferred is machinery attached to the earth, the moveable parts thereof will also be included within the scope of the transfer as an essential incident. Under S. 70 of the same Act, if, after the date of mortgage, any accession is made to the mortgaged property, the mortgagee will ordinarily be entitled to it, in the absence of a contract to the contrary.

3. The question whether a particular document should be construed as a mortgage falling within Art. 40 of the Schedule I, or is merely an agreement or memorandum of the terms of a mortgage created by deposit of title deeds falling under Art. 6(2)(a), came up before a Special Bench of the Bombay High Court in In re, Indian Stamp Act, 1899, AIR 1954 Bom 462. In other words, the precise question which now concerns us arose for determination on the facts of that case. Delivering the judgment of the Bench, Chagla C. J. referred to the definition of mortgage deed in S. 2(17), that we have set forth earlier. He then pointed out that the Stamp Act, per se, made no distinction between a legal and an equitable mortgage. But the legislature made a special provision in Art. 6, which relates to that class of documents which should be interpreted as an agreement or memorandum of mortgage by the deposit of title deeds, and not a deed of mortgage in its own right. The principle of differentiation between the two categories was expressed by the Bench in the following words :

"In other words, it the document merely contains the bargain between the parties with regard to the deposit of title deeds, then although it creates an interest in im