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High Court of Judicature at Madras
The Honourable Mr. Justice A. Raman
T.V. Alwar
Versus
Bank of Tamil Nadu, Tirunelveli through its Branch Manager, having its office at East Car St., Tirunelveli Town
S.A.No.2307 of 1983
Decided On : 22-08-1997
EQUITABLE MORTGAGE - DEPOSIT OF TITLE DEEDS - MEMORANDUM OF DEPOSIT - REGISTRATION - SECTION 17, REGISTRATION ACT - INTERPRETATION - ESSENTIAL INGREDIENTS - INTENTION OF PARTIES - INTEGRAL PART OF TRANSACTION - CREATION OF INTEREST IN IMMOVABLE PROPERTY.
Fact of the Case:
The plaintiff filed a suit for recovery of a sum of Rs. 19,842.15 alleging that the defendant obtained a loan of Rs. 15,000 from the plaintiff's bank on 6. 1977 agreeing to pay interest at 16% with quarterly rests. The defendant also executed a promissory note as security for the same and a letter of undertaking agreeing to pay the said sum in 30 monthly equal instalments. It was further agreed that the defendants should pay the interest as fixed by the Bank from time to time and pay penal interest at 3% over the scheduled rate in default. On 6. 1977 the defendant deposited with the plaintiff at Thachanallur the title deeds with intent to create an equitable mortgage over the properties set out in the plaint. On 16. 1977 confirming the deposit of the title deeds the defendant also wrote a letter to the plaintiff. The defendant contended that the suit is not maintainable, the allegation that he agreed to pay interest at 16% and he further agreed to pay interest as fixed by the bank and penal interest at 3% over the scheduled rate of interest is not true, he did not create nor intended to create an equitable mortgage, he did not deposit the title deeds, he did not writ any letter confirming the deposit of title deeds, there is no equitable mortgage created at all nor subsisting, the defendant no doubt borrowed Rs. 15,000 from the plaintiff promising to repay the sum in instalments, there is no other transaction, the signature of the defendant were obtained, the defendant does not know English, he did not sign the papers on the date mentioned in the plaint, or in the document, if at all the plaintiff has got any right, it is only to collect the amount due and not more than that, the claim is premature, there is no valid agreement for payment of interest of 16%, the amount claimed is not correct, the plaintiff is entitled to only 6% of simple interest, the plaintiffs claim for compound interest is not tenable in law, the interest claimed is exhorbitant and prohibited by law, the plaintiff has no locus standi to issue the defendant, the allegation that the defendant gave a letter on 6. 1977 stating the details of the documents deposited is not correct, it is only a memorandum whereby the equitable mortgage is created, the said mortgage has been hit by provisions of the Registration Act.
Finding of the Court:
The court held that the document in question is at best only a list of title deeds and that the document can never be said to form an integral part of the transaction nor it can be stated to evidence the bargain between the parties. On the other hand, it is at best an instrument recording the particulars of document and nothing more. The document was not intended to and did not operate to create any right in or over any property nor has the effect of creating any charge over the property and therefore it is not a document which requires to be registered.
Issues: Whether the memorandum of deposit of title deeds (Ex.A-8) is compulsorily registerable under Section 17 of the Registration Act?
Ratio Decidendi: The court relied on the following principles in reaching its decision: 1. A memorandum of deposit of title deeds is not compulsorily registerable under Section 17 of the Registration Act if it is merely a list of the documents deposited and does not embody the terms of the agreement between the parties. 2. A memorandum of deposit of title deeds is compulsorily registerable under Section 17 of the Registration Act if it is intended to be an integral part of the transaction and operates to create or declare any right, title or interest in the property. 3. The intention of the parties is the key factor in determining whether a memorandum of deposit of title deeds is compulsorily registerable under Section 17 of the Registration Act.
Final Decision: The court dismissed the appeal and confirmed the judgments and decrees of the courts below.
1. This appeal is directed against the judgment and decree passed by the Additional District Judge, Tirunelveli in A.S.No. 126 on 1982 on 17. 1983. The plaintiff filed the suit for recovery of a sum of Rs. 19,842.15 on the following allegations. The defendant obtained a loan of Rs. 15,000 from the plaintiffs Bank on 6. 1977 agreeing to pay interest at 16% with quarterly rests. The defendant also executed promissory note as security for the same on 6. 1977. He also executed a letter of undertaking agreeing to pay the said sum in 30 monthly equal instalments. It was further agreed that the defendants should pay the interest as fixed by the Bank from time to time and pay penal interest at 3% over the scheduled rate in default. On 6. 1977 the defendant deposited with the plaintiff at Thachanallur the title deeds with intent to create an equitable mortgage over the properties set out in the plaint. On 16. 1977 confirming the deposit of the title deeds the defendant also wrote a letter to the plaintiff. Thus the equitable mortgage has been created over the scheduled property. As the defendant was irregular in payment, the plaintiff sent a notice on 11. 1978. The defendant sent his reply requesting for time. Therefore the suit. The defendant filed a written statement putting forth the following contentions:-The suit is not maintainable. The allegation that the defendant agreed to pay interest at 16% and he further agreed to pay interest as fixed by the bank and penal interest at 3% over the scheduled rate of interest is not true. The defendant did not create nor intended to create an equitable mortgage. He did not deposit the title deeds. He did not writ any letter confirming the deposit of title deeds. There is no equitable mortgage created at all nor subsisting. The defendant no doubt borrowed Rs. 15,000 from the plaintiff promising to repay the sum in instalments. There is no other transaction. The signature of the defendant were obtained. The defendant does not know English. He did not sign the papers on the date mentioned in the plaint, or in the document. If at all the plaintiff has got any right, it is only to collect the amount due and not more than that. The claim is premature. There is no valid agreement for payment of interest of 16%. The amount claimed is not correct. The plaintiff is entitled to only 6% of simple interest. The plaintiffs claim for compound interest is not tenable in law. The interest claimed is exhorbitant and prohibited by law. The plaintiff has no locus standi to issue the defendant. The allegation that the defendant gave a letter on 6. 1977 stating the details of the documents deposited is not correct. It is only a memorandum whereby the equitable mortgage is created. The said mortgage has been hit by provisions of the Registration Act.
2. The plaintiff in his reply statement pleaded as follows:-
The defendant applied to the plaintiff bank for loan on 21. 1977 and 15. 1977. But the applications were approved on 25. 1977. One of the conditions of the loan is that if one instalment is not paid, the entire amount with interest would become due. The terms of the loan were all considered and settled and approved by the parties. The undertaking letter of deposit of title deeds was made by the defendant in pursuance of the terms and conditions. The suit transaction is not hit by the Registration Act. Before the 1st Additional Sub Judge, Tirunelveli, who conducted the trial on behalf of the plaintiff Swaminatha Mudaliar was examined as P.W.-l. On the defendants side, no witness was examined. ExsA-1 to A-19 were marked. The first Additional Sub Judge, who conducted the trial of the suit by his judgment dated 30.9.1981 decreed the suit with costs. Aggrieved by the same, the defendant preferred an appeal in A.S.No. 126 of 1982 to the District Court, Tirunelveli and the Second Additional District Judge by his judgment dated 17. 1983 dismissed the appeal and confirmed the judgment and decree of the t
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