Mortgage by deposit of title deeds created by act of deposit; memorandum acknowledging without terms needs no registration.

JUDGMENT

The plaintiff in a money suit is the appellant herein.

2. O.S. No.179 of 1997 on the file of the Subordinate Judge, Palakkad, was filed by the appellant contending that on 01.06.1995, the defendants borrowed an amount of Rs.1,50,000/- (Rupees one lakhs fifty thousand only) from the plaintiff, promising to repay the same with 12% interest as and when demanded, and on that day, the defendants had executed a promissory note together with mortgaging the property belonging to the defendants in the Palakkad Municipality by handing over possession of the land and signed the memorandum by the defendants.

3. The defendants did not repay the amount as agreed in the promissory note, which forced the plaintiff to send a notice on 14.01.1997 and thereafter filed the suit. The defendants entered appearance and contended that they did not borrow Rs. 1,50,000/- (Rupees one lakh fifty thousand only), as mentioned, nor execute a promissory note as alleged. However, they admitted the receipt of Rs.50,000/- (Rupees fifty thousand only) and, as security for that amount and at the request of the plaintiff, blank stamp papers were given along with the assignment deeds to the plaintiff. The defendants alleged that the plaintiff had subsequently filled up the signed papers and concocted documents styled as a promissory note and as a memorandum. Before the trial Court, the plaintiff was examined, and Exts.A1 to A5 were marked, and there was no oral or documentary evidence adduced on the side of the defendants.

4. The trial Court found that PW1, in its cross- examination, had admitted that the promissory note and the memorandum were created simultaneously and therefore, registration was mandatory for creating an equitable mortgage as provided underSection 17of theRegistration Act, 1908. The trial Court also relied on the judgment of this Court inJoseph v. Michael[2000 (1) KLT 857]. Thus, the trial Court held that, based on the admission of PW1, the promissory note and the memorandum were reduced into writing on the same day and time, and thus the mortgage created by the deposit of the title deeds was to be registered in a notified town, and therefore, the plaintiff cannot be given a decree. 5. The plaintiff filed I.A. No.1382 of 2002 to amend the plaint, praying for the return of the amount covered by the pro- note with interest. The said I.A. was dismissed on 27.06.2002. The trial Court further found that the pronote and the memorandum had no enforceable validity and that the pronote was not supported by consideration; accordingly, the suit was dismissed.

6. The learned counsel for the appellant submits that the trial Court had seriously erred in arriving at the findings and that a mortgage is created by the mere handing over of the title deeds as a security for which no registered document is necessary. Only if the memorandum evidencing the terms and conditions with regard to the deposit is executed, then it requires registration under Section 17(1)(c) of the Registration Act, 1908. It is argued that it is not the time of execution of the memorandum/letter of acknowledgement that is decisive, but whether the memorandum or the letter incorporates any term or condition.

7. A Division Bench of this Court in South Indian Bank Ltd. v. K.P. Ramachandran and Another [2017 (2) KHC 998], held that the earlier decision in Joseph v. Michael [2000 (1) KLT 857], relied on Hubert Peyoli v. Santhavilasath Kesavan Sivadasan [1998 (2) KLT 125], and proceeded on the basis that the determinative factor for registration of a memorandum of deposit of title deeds is the time of its execution, i.e., whether it was contemporaneous with or subsequent to the depo