1992 Supreme(Mad) 212

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE VENKATASWAMI & THE HONOURABLE MR. JUSTICE ABDUL HADI
M.A.V.R. Nataraja Nadar & Others
Versus
State Bank of India, Virudhunagar Branch, etc. & Another
Appeal Against Order (C.M.A.) No. 66 of 1986
Decided On :Decided On : 22-04-1992

Headnote:

EQUITABLE MORTGAGE - DOCUMENTS OF TITLE - REGISTRATION - INTENTION TO CREATE MORTGAGE - DEPOSIT OF ORIGINAL DOCUMENTS - DEPOSIT OF REGISTRATION COPY - VALIDITY - TRANSFER OF PROPERTY ACT, 1882, S. 58(F).

Fact of the Case:

The appellants had credit facilities with the Bank for discounting bills, as persons doing business in cardamom for a very long time. The second appellant called on the concerned Officer in the Bank on 2-1-1970 and handed over the title deeds relating to item 2, with an intention to create a security in respect of advances made and to be made by the Bank, together with interest and charges. By so depositing, an equitable mortgage was created in respect of item 2. When the second appellant wanted an increase in the credit facilities in the year 1978, the Bank wanted further securities, and the second appellant, agreeing for the same, made his wife to give her property as security and to stand as guarantor. Accordingly, on the basis of the equitable mortgage once again created in respect of item 2 of the Schedule property, and also of the property belonging to the wife of the second appellant, the credit facilities were increased upto to Rs. 11 Lakhs. This was on 8-3-1978. On that day, documents relating to the properties of the wife of the second appellant were deposited. Later on, large number of discounted bills were found not paid by the drawees and in consequence thereof, large amounts were outstanding. Therefore, the Bank insisted upon further security of immoveable property from the second appellant. The appellants offered to mortgage Item No. 1 of the Schedule properties by depositing the title deeds. For that purpose, the second appellant called at the Bank on 10-6-1980 and deposited the title deeds relating to the item No. 1. According to the first respondent, the second respondent, suppressing the mortgages in favour of the first respondent, had obtained an attachment before Judgment over items 1 and 2 of the properties described in the suit filed by it. Therefore, it has become necessary for the bank to move the court below, to raise the attachment.

Finding of the Court:

1. The Court below should have accepted the case of the appellants that the documents were not handed over by the second appellant with an intention to create an equitable mortgage. 2. As regards item 2, the document handed over to the Bank was only a registration copy of a partition deed and there is nothing to suggest that an equitable mortgage was created in respect of item 2 as there are number of other items dealt with in that document. 3. The other contention was that on the basis of a registration copy of a partition deed, no valid equitable mortgage can be created. 4. In any event, the letters written by the second appellant, namely, Exx. P. 7, P. 8 and P. 29 require registration, and in the absence of that, the Bank cannot contend that it has got valid equitable mortgages over items 1 and 2. 5. Lastly, it was contended that as regards the first item, only for a part of the property, document was produced and not of the whole of item 1 and, therefore, there was no valid mortgage for the whole of item 1.

Issues: 1. Whether the documents namely, Exx. p. 7, p. 8 and p. 29 require registration to create valid equitable mortgages in favour of the Bank? 2. Whether for creating a valid equitable mortgage all the orginal documents relating to the property should be deposited with the mortgagee, and, whether, in the absence of orginal, registration copy can be deposited or other documents can also be produced with an intention to create an equitable mortgage? 3. Whether the appellants handed over the documents with an intention to create an equitable mortgage or not, and whether the handing over of partition deed by itself will not amount to an intention to create an equitable mortgage in respect of item 2?

Ratio Decidendi: 1. Exx. P. 7, P. 8 and P. 29 do not require registration to create valid equitable mortgages in favour of the Bank. 2. For creating a valid equitable mortgage, it is not necessary that all the orginal documents relating to the property should be deposited with the mortgagee. In the absence of orginal, registration copy can be deposited or other documents can also be produced with an intention to create an equitable mortgage. 3. The appellants handed over the documents with an intention to create an equitable mortgage and the handing over of partition deed by itself will amount to an intention to create an equitable mortgage in respect of item 2.

Final Decision: Appeal dismissed. Order of the Court below confirmed. No costs.