This Court had the occasion to consider this
question in the case of Rachpal v. Bhagwandas, AIR
37 1950 SC 272, and the statement of law made
therein supports the view we have taken, which
would be evident from the following passage of the
judgment:
“4. A mortgage by deposit of titledeeds
is a form of mortgage recognized
by S. 58(f), T.P. Act, which provides
that it may be effected in certain
towns (including Calcutta) by a person
“delivering to his creditor or his
agent documents of title to immovable
property with intent to create a
security thereon.” That is to say,
when the debtor deposits with the
creditor the title-deeds of his
property with intent to create a
security, the law implies a contract
between the parties to create a
mortgage, and no registered instrument
is required under S.59 as in other
forms of mortgage. But if the parties
choose to reduce the contract to
writing, the implication is excluded
by their express bargain, and the
document will be the sole evidence of
its terms. In such a case the deposit
and the document both form integral
parts of the transaction and are
essential ingredients in the creation
of the mortgage. As the deposit alone
is not intended to create the charge
and the document, which constitutes
the bargain regarding the security, is
also necessary and operates to create
the charge in conjunction with the
deposit, it requires registration
under S.17, Registration Act, 1908, as
a non-testamentary instrument creating
an interest in immovable property,
where the value of such property is
one hundred rupees and upwards. The
time factor is not decisive. The
document may be handed over to the
creditor along with the title-deeds
and yet may not be registrable……”
This Court while relying on the aforesaid
judgment in the case of United Bank of India v.
M/s. Lekharam Sonaram & Co.,AIR 1965 SC 1591
reiterated as follows:
“7. …………It is essential to bear in
mind that the essence of a mortgage by
deposit of title-deeds is the actual
handing over by a borrower to the
lender of documents of title to
immovable property with the intention
that those documents shall constitute
a security which will enable the
creditor ultimately to recover the
money which he has lent. But if the
parties choose to reduce the contract
to writing, this implication of law is
excluded by their express bargain, and
the document will be the sole evidence
of its terms. In such a case the
deposit and the document both form
integral parts of the transaction and
are essential ingredients in the
creation of the mortgage. It follows
that in such a case the document which
constitutes the bargain regarding
security requires registration under
Section 17 of the Indian Registration
Act, 1908, as a non-testamentary
instrument creating an interest in
immovable property, where the value of
such property is one hundred rupees
and upwards. If a document of this
character is not registered it cannot
be used in the evidence at all and the
transaction itself cannot be proved by
oral evidence either…….”
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.9030 OF 2013
(@ SPECIAL LEAVE PETITION (CIVIL) NO. 18323 OF 2008)
STATE OF HARYANA & OTHERS
V
NAVIR SINGH AND ANOTHER
Dated: OCTOBER 7, 2013.
The petitioners, aggrieved by the order of the
High Court directing entry of charge in the revenue
records on the basis of mortgage created by deposit
of title-deeds, have preferred this special leave
petition.
Delay condoned.
Leave granted.
Shorn of unnecessary details, facts giving rise
to the present appeal are that one M/s. Ultra Tech
Private, a company incorporated under the Companies
Act, was sanctioned a term loan of Rs. 425 lakhs
and working capital facility of Rs.99 lakhs by the
Punjab National Bank (hereinafter referred to as
the Bank). As agreed by the Bank, original titledeeds
in respect of 19 Marlas of land belonging to
Narvir Singh and 31 Marlas of land owned by
Rajinder Kaur were deposited with the Bank by the
borrower. In this way mortgage by deposit of
title-deeds took place. It is not in dispute that
this transaction had taken place in a town notified
under Section 58(f) of the Transfer of Property
Act. The Bank wrote to the Tahsildar, Panchkula
for mutation on the basis of mortgage effected by
deposit of the title-deeds. When nothing was done,
the land owner filed writ petition before the High
Court inter alia praying for mutation on the basis
of mortgage aforesaid.
The respondents resisted mutation inter alia on
the ground that no entry can be made as the
instrument of deposit of title-deeds is
compulsorily registrable under Section 17(1)(c) of
the Registration Act and for that, they relied on a
letter dated 29th March, 2007 of the Finance
Commissioner and Principal Secretary to Government,
the relevant portion whereof reads as under:
2.It is clarified that the instrument
of deposit of title-deed/Equitable
Mortgage is compulsorily registrable
under Section 17(1)(c) of the Indian
Registration Act, 1908.
Registration fee is payable under
Article 1(1)(b) in the table of
Registration Fees Notification dated
06th November, 2006. Article 6 of
the schedule I-A of the Indian Stamp
Act, 1899 provides for rate of Stamp
Duty (SD) chargeable on deposit of
title-deeds/equitable mortgage.
xxx xxx xxx“
According to the respondents, in the absence of
registration as aforesaid and payment of
registration fee and stamp duty, the prayer for
mutation cannot be allowed.
The High Court considered the objection and
negatived the same in the following words:
“We are of the view that an equitable
mortgage is created by deposit of
title-deeds and not through any
written instrument. Simple pledge of
the title-deeds to the bank as
Security creates an equitable
mortgage, therefore, there is never an
instrument of deposit of titledeed/equitable
mortgage. The
petitioner simply went to the bank and
handed over the title-deeds of their
respective properties. This act was
enough to create a mortgage as
envisaged under Section 58(f) of the
Transfer of Property Act. Quite often
a memorandum is drawn up regarding the
handing over of the title-deeds but
this memorandum is simply a written
record of the pledge. The memorandum
itself is not an instrument of
mortgage………..”
Mr. B.S. Mor, Additional Advocate General
appearing for the State submits that mortgage by
deposit of title-deeds requires registration under
Section 17(1)(c) of the Registration Act, 1908.
Further it mandates payment of fee as prescribed
under article 1(1)(b) of the Registration Fees
notification dated 6th November, 2006. In addition,
payment of stamp duty as per Article 6 of the
Indian Stamp Act is also required. According to
Mr. Mor in the absence of all these the mortgage by
deposit of title-deeds cannot form the basis of
mutation.
Mr. Harikesh Singh, learned counsel appearing
for the respondents, however, submits that mortgage
by deposit of title-deeds does not need any
registered instrument. Hence, there is no question
of deposit of any fee thereon. According to him, it
also does not require payment of duty under the
Stamp Act.
An application for impleadment has been filed
by the Bank for being impleaded as a party to the
proceedings, which was allowed by this Court vide
order dated 12th July, 2010. The Bank is
represented by Mr.Rajesh Kumar, Advocate for M/s.
Mitter & Mitter, Advocates.
Another application for impleadment (I.A. No. 3
of 2011) has been filed by Shankar Twine Products
Pvt. Ltd. through its Director. We reject this
petition giving liberty to it to take recourse to
such other remedy as is available to it before the
court of competent jurisdiction.
In view of rival submissions, the question
which falls for consideration is whether ‘charge’
of mortgage can be entered in the revenue record in
respect of a mortgage effected by deposit of
title-deeds without its registration and payment of
registration fee and stamp duty.
Mortgage by deposit of title-deeds is
sanctioned by law under Section 58(f) of the
Transfer of Property Act in specified towns, same
reads as follows:
"58. “Mortgage”, “mortgagor”,
“mortgagee”, “mortgage-money” and
“mortgage-deed” defined.—
(a) xxx xxx xxx
(e) xxx xxx xxx
(f) Mortgage by deposit of titledeeds.—Where
a person in any of the
following towns, namely, the towns of
Calcutta, Madras, and Bombay, and in
any other town which the State
Government concerned may, by
notification in the Official Gazette,
specify in this behalf, delivers to a
creditor or his agent documents of
title to immoveable property, with
intent to create a security thereon,
the transaction is called a mortgage
by deposit of title-deeds.”
Mortgage inter alia means transfer of interest
in the specific immovable property for the purpose
of securing the money advanced by way of loan.
Section 17(1)(c) of the Registration Act provides
that a non-testamentary instrument which
acknowledges the receipt or payment of any
consideration on account of the creation,
declaration, assignment, limitation or extension of
any such right, title or interest, requires
compulsory registration. Mortgage by deposit of
title-deeds in terms of Section 58(f) of the
Transfer of Property Act surely acknowledges the
receipt and transfer of interest and, therefore,
one may contend that its registration is
compulsory. However, Section 59 of the Transfer of
Property Act mandates that every mortgage other
than a mortgage by deposit of title-deeds can be
effected only by a registered instrument. In the
face of it, in our opinion, when the debtor
deposits with the creditor title-deeds of the
property for the purpose of security, it becomes
mortgage in terms of Section 58(f) of the Transfer
of Property Act and no registered instrument is
required under Section 59 thereof as in other
classes of mortgage. The essence of mortgage by
deposit of title-deeds is handing over by a
borrower to the creditor title-deeds of immovable
property with the intention that those documents
shall constitute security, enabling the creditor to
recover the money lent. After the deposit of the
title-deeds the creditor and borrower may record
the transaction in a memorandum but such a
memorandum would not be an instrument of mortgage.
A memorandum reducing other terms and conditions
with regard to the deposit in the form of a
document, however, shall require registration under
Section 17(1)c) of the Registration Act, but in a
case in which such a document does not incorporate
any term and condition, it is merely evidential and
does not require registration.
This Court had the occasion to consider this
question in the case of Rachpal v. Bhagwandas, AIR
37 1950 SC 272, and the statement of law made
therein supports the view we have taken, which
would be evident from the following passage of the
judgment:
“4. A mortgage by deposit of titledeeds
is a form of mortgage recognized
by S. 58(f), T.P. Act, which provides
that it may be effected in certain
towns (including Calcutta) by a person
“delivering to his creditor or his
agent documents of title to immovable
property with intent to create a
security thereon.” That is to say,
when the debtor deposits with the
creditor the title-deeds of his
property with intent to create a
security, the law implies a contract
between the parties to create a
mortgage, and no registered instrument
is required under S.59 as in other
forms of mortgage. But if the parties
choose to reduce the contract to
writing, the implication is excluded
by their express bargain, and the
document will be the sole evidence of
its terms. In such a case the deposit
and the document both form integral
parts of the transaction and are
essential ingredients in the creation
of the mortgage. As the deposit alone
is not intended to create the charge
and the document, which constitutes
the bargain regarding the security, is
also necessary and operates to create
the charge in conjunction with the
deposit, it requires registration
under S.17, Registration Act, 1908, as
a non-testamentary instrument creating
an interest in immovable property,
where the value of such property is
one hundred rupees and upwards. The
time factor is not decisive. The
document may be handed over to the
creditor along with the title-deeds
and yet may not be registrable……”
This Court while relying on the aforesaid
judgment in the case of United Bank of India v.
M/s. Lekharam Sonaram & Co.,AIR 1965 SC 1591
reiterated as follows:
“7. …………It is essential to bear in
mind that the essence of a mortgage by
deposit of title-deeds is the actual
handing over by a borrower to the
lender of documents of title to
immovable property with the intention
that those documents shall constitute
a security which will enable the
creditor ultimately to recover the
money which he has lent. But if the
parties choose to reduce the contract
to writing, this implication of law is
excluded by their express bargain, and
the document will be the sole evidence
of its terms. In such a case the
deposit and the document both form
integral parts of the transaction and
are essential ingredients in the
creation of the mortgage. It follows
that in such a case the document which
constitutes the bargain regarding
security requires registration under
Section 17 of the Indian Registration
Act, 1908, as a non-testamentary
instrument creating an interest in
immovable property, where the value of
such property is one hundred rupees
and upwards. If a document of this
character is not registered it cannot
be used in the evidence at all and the
transaction itself cannot be proved by
oral evidence either…….”
Bearing in mind the principles aforesaid, we
proceed to consider the facts of the present case.
It is relevant here to state that letter dated 29th
March, 2007 of the Finance Commissioner inter alia
makes “instrument of deposit of title-deeds
compulsorily registrable under Section 17(1)(c) of
the Registration Act.” In such contingency,
registration fee and stamp duty would be leviable.
But the question is whether mortgage by deposit of
title-deeds is required to be done by an instrument
at all. In our opinion, it may be effected in
specified town by the debtor delivering to his
1Page 13
creditor documents of title to immoveable property
with the intent to create a security thereon. No
instrument is required to be drawn for this
purpose. However, the parties may choose to have a
memorandum prepared only showing deposit of the
title-deeds. In such a case also registration is
not required. But in a case in which the memorandum
recorded in writing creates right, liability or
extinguishes those, same requires registration. In
our opinion, the letter of the Finance Commissioner
would apply in cases where the instrument of
deposit of title-deeds incorporates terms and
conditions in addition to what flow from the
mortgage by deposit of title-deeds. But in that
case there has to be an instrument which is an
integral part of the transaction regarding the
mortgage by deposit of title-deeds. A document
merely recording a transaction which is already
concluded and which does not create any rights and
liabilities does not require registration. Nothing
has been brought on record to show existence of any
1Page 14
instrument which has created or extinguished any
right or liability. In the case in hand, the
original deeds have just been deposited with the
bank. In the face of it, we are of opinion that
the charge of mortgage can be entered into revenue
record in respect of mortgage by deposit of titledeeds
and for that, instrument of mortgage is not
necessary. Mortgage by deposit of title-deeds
further does not require registration. Hence, the
question of payment of registration fee and stamp
duty does not arise. By way of abundant caution
and at the cost of repetition we may, however,
observe that when the borrower and the creditor
choose to reduce the contract in writing and if
such a document is the sole evidence of terms
between them, the document shall form integral part
of the transaction and same shall require
registration under Section 17 of the Registration
Act. From conspectus of what we have observed
above, we do not find any error in the judgment of
the High Court.
1Page 15
In the result, we do not find any merit in the
appeal and it is dismissed accordingly but without
any order as to costs.
CIVIL APPEAL NO.9049 OF 2013 (@SLP (C) NO. 924/2009)
Delay condoned.
Leave granted.
By the impugned order, the High Court had
directed the appellants herein to enter mutation in
favour of Punjab National Bank in respect of the
properties mortgaged by deposit of title-deeds.
According to the appellants, the properties
mortgaged by deposit of title-deeds are situated in
the village Matab Garh in the District of Ludhiana
and at village Dallomajra, Tahsil and District
Fatehgarh Sahib and village Sadhugarh in the
District Sirhind.
It is the stand of the appellants that deposit
of the title-deeds are not in relation to the
1Page 16
properties situated in the towns specified under
Section 58(f) or in the towns notified by the State
Government in terms of Section 58 of the Transfer
of Property Act. In this connection, our attention
has been drawn to the notification dated May 26,
2003 of the Government of Punjab in the Department
of Revenue and Rehabilitation, same reads as
follows:
“In exercise of the power conferred by
clause (f) of Section 58 of the
Transfer of Property Act, 1882
(Central Act No. 4 of 1882) and all
other powers enabling him in this
behalf, the Governor of Punjab is
pleased to specify Gobindgarh in the
district Fatehgarh Sahib and Mohali in
District Roop Nagar in the State of
Punjab as Towns for the purpose of the
aforesaid section of the said Act.”
This aspect of the matter has not been
considered by the High Court in the impugned
judgment. As the same goes to the root of the
matter, we have no option than to set aside the
impugned order and remit the matter back for its
1Page 17
fresh consideration in accordance with law in the
light of the observation made above.
In the result, we allow this appeal, set aside
the impugned judgment of the High Court and remit
the matter back to the High Court for fresh
consideration in accordance with law.
………..………..……………………………….J.
(CHANDRAMAULI KR. PRASAD)
………………….………………………………….J.
(KURIAN JOSEPH)
NEW DELHI,
OCTOBER 7, 2013.
Print Page
question in the case of Rachpal v. Bhagwandas, AIR
37 1950 SC 272, and the statement of law made
therein supports the view we have taken, which
would be evident from the following passage of the
judgment:
“4. A mortgage by deposit of titledeeds
is a form of mortgage recognized
by S. 58(f), T.P. Act, which provides
that it may be effected in certain
towns (including Calcutta) by a person
“delivering to his creditor or his
agent documents of title to immovable
property with intent to create a
security thereon.” That is to say,
when the debtor deposits with the
creditor the title-deeds of his
property with intent to create a
security, the law implies a contract
between the parties to create a
mortgage, and no registered instrument
is required under S.59 as in other
forms of mortgage. But if the parties
choose to reduce the contract to
writing, the implication is excluded
by their express bargain, and the
document will be the sole evidence of
its terms. In such a case the deposit
and the document both form integral
parts of the transaction and are
essential ingredients in the creation
of the mortgage. As the deposit alone
is not intended to create the charge
and the document, which constitutes
the bargain regarding the security, is
also necessary and operates to create
the charge in conjunction with the
deposit, it requires registration
under S.17, Registration Act, 1908, as
a non-testamentary instrument creating
an interest in immovable property,
where the value of such property is
one hundred rupees and upwards. The
time factor is not decisive. The
document may be handed over to the
creditor along with the title-deeds
and yet may not be registrable……”
This Court while relying on the aforesaid
judgment in the case of United Bank of India v.
M/s. Lekharam Sonaram & Co.,AIR 1965 SC 1591
reiterated as follows:
“7. …………It is essential to bear in
mind that the essence of a mortgage by
deposit of title-deeds is the actual
handing over by a borrower to the
lender of documents of title to
immovable property with the intention
that those documents shall constitute
a security which will enable the
creditor ultimately to recover the
money which he has lent. But if the
parties choose to reduce the contract
to writing, this implication of law is
excluded by their express bargain, and
the document will be the sole evidence
of its terms. In such a case the
deposit and the document both form
integral parts of the transaction and
are essential ingredients in the
creation of the mortgage. It follows
that in such a case the document which
constitutes the bargain regarding
security requires registration under
Section 17 of the Indian Registration
Act, 1908, as a non-testamentary
instrument creating an interest in
immovable property, where the value of
such property is one hundred rupees
and upwards. If a document of this
character is not registered it cannot
be used in the evidence at all and the
transaction itself cannot be proved by
oral evidence either…….”
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.9030 OF 2013
(@ SPECIAL LEAVE PETITION (CIVIL) NO. 18323 OF 2008)
STATE OF HARYANA & OTHERS
V
NAVIR SINGH AND ANOTHER
Dated: OCTOBER 7, 2013.
The petitioners, aggrieved by the order of the
High Court directing entry of charge in the revenue
records on the basis of mortgage created by deposit
of title-deeds, have preferred this special leave
petition.
Delay condoned.
Leave granted.
Shorn of unnecessary details, facts giving rise
to the present appeal are that one M/s. Ultra Tech
Private, a company incorporated under the Companies
Act, was sanctioned a term loan of Rs. 425 lakhs
and working capital facility of Rs.99 lakhs by the
Punjab National Bank (hereinafter referred to as
the Bank). As agreed by the Bank, original titledeeds
in respect of 19 Marlas of land belonging to
Narvir Singh and 31 Marlas of land owned by
Rajinder Kaur were deposited with the Bank by the
borrower. In this way mortgage by deposit of
title-deeds took place. It is not in dispute that
this transaction had taken place in a town notified
under Section 58(f) of the Transfer of Property
Act. The Bank wrote to the Tahsildar, Panchkula
for mutation on the basis of mortgage effected by
deposit of the title-deeds. When nothing was done,
the land owner filed writ petition before the High
Court inter alia praying for mutation on the basis
of mortgage aforesaid.
The respondents resisted mutation inter alia on
the ground that no entry can be made as the
instrument of deposit of title-deeds is
compulsorily registrable under Section 17(1)(c) of
the Registration Act and for that, they relied on a
letter dated 29th March, 2007 of the Finance
Commissioner and Principal Secretary to Government,
the relevant portion whereof reads as under:
2.It is clarified that the instrument
of deposit of title-deed/Equitable
Mortgage is compulsorily registrable
under Section 17(1)(c) of the Indian
Registration Act, 1908.
Registration fee is payable under
Article 1(1)(b) in the table of
Registration Fees Notification dated
06th November, 2006. Article 6 of
the schedule I-A of the Indian Stamp
Act, 1899 provides for rate of Stamp
Duty (SD) chargeable on deposit of
title-deeds/equitable mortgage.
xxx xxx xxx“
According to the respondents, in the absence of
registration as aforesaid and payment of
registration fee and stamp duty, the prayer for
mutation cannot be allowed.
The High Court considered the objection and
negatived the same in the following words:
“We are of the view that an equitable
mortgage is created by deposit of
title-deeds and not through any
written instrument. Simple pledge of
the title-deeds to the bank as
Security creates an equitable
mortgage, therefore, there is never an
instrument of deposit of titledeed/equitable
mortgage. The
petitioner simply went to the bank and
handed over the title-deeds of their
respective properties. This act was
enough to create a mortgage as
envisaged under Section 58(f) of the
Transfer of Property Act. Quite often
a memorandum is drawn up regarding the
handing over of the title-deeds but
this memorandum is simply a written
record of the pledge. The memorandum
itself is not an instrument of
mortgage………..”
Mr. B.S. Mor, Additional Advocate General
appearing for the State submits that mortgage by
deposit of title-deeds requires registration under
Section 17(1)(c) of the Registration Act, 1908.
Further it mandates payment of fee as prescribed
under article 1(1)(b) of the Registration Fees
notification dated 6th November, 2006. In addition,
payment of stamp duty as per Article 6 of the
Indian Stamp Act is also required. According to
Mr. Mor in the absence of all these the mortgage by
deposit of title-deeds cannot form the basis of
mutation.
Mr. Harikesh Singh, learned counsel appearing
for the respondents, however, submits that mortgage
by deposit of title-deeds does not need any
registered instrument. Hence, there is no question
of deposit of any fee thereon. According to him, it
also does not require payment of duty under the
Stamp Act.
An application for impleadment has been filed
by the Bank for being impleaded as a party to the
proceedings, which was allowed by this Court vide
order dated 12th July, 2010. The Bank is
represented by Mr.Rajesh Kumar, Advocate for M/s.
Mitter & Mitter, Advocates.
Another application for impleadment (I.A. No. 3
of 2011) has been filed by Shankar Twine Products
Pvt. Ltd. through its Director. We reject this
petition giving liberty to it to take recourse to
such other remedy as is available to it before the
court of competent jurisdiction.
In view of rival submissions, the question
which falls for consideration is whether ‘charge’
of mortgage can be entered in the revenue record in
respect of a mortgage effected by deposit of
title-deeds without its registration and payment of
registration fee and stamp duty.
Mortgage by deposit of title-deeds is
sanctioned by law under Section 58(f) of the
Transfer of Property Act in specified towns, same
reads as follows:
"58. “Mortgage”, “mortgagor”,
“mortgagee”, “mortgage-money” and
“mortgage-deed” defined.—
(a) xxx xxx xxx
(e) xxx xxx xxx
(f) Mortgage by deposit of titledeeds.—Where
a person in any of the
following towns, namely, the towns of
Calcutta, Madras, and Bombay, and in
any other town which the State
Government concerned may, by
notification in the Official Gazette,
specify in this behalf, delivers to a
creditor or his agent documents of
title to immoveable property, with
intent to create a security thereon,
the transaction is called a mortgage
by deposit of title-deeds.”
Mortgage inter alia means transfer of interest
in the specific immovable property for the purpose
of securing the money advanced by way of loan.
Section 17(1)(c) of the Registration Act provides
that a non-testamentary instrument which
acknowledges the receipt or payment of any
consideration on account of the creation,
declaration, assignment, limitation or extension of
any such right, title or interest, requires
compulsory registration. Mortgage by deposit of
title-deeds in terms of Section 58(f) of the
Transfer of Property Act surely acknowledges the
receipt and transfer of interest and, therefore,
one may contend that its registration is
compulsory. However, Section 59 of the Transfer of
Property Act mandates that every mortgage other
than a mortgage by deposit of title-deeds can be
effected only by a registered instrument. In the
face of it, in our opinion, when the debtor
deposits with the creditor title-deeds of the
property for the purpose of security, it becomes
mortgage in terms of Section 58(f) of the Transfer
of Property Act and no registered instrument is
required under Section 59 thereof as in other
classes of mortgage. The essence of mortgage by
deposit of title-deeds is handing over by a
borrower to the creditor title-deeds of immovable
property with the intention that those documents
shall constitute security, enabling the creditor to
recover the money lent. After the deposit of the
title-deeds the creditor and borrower may record
the transaction in a memorandum but such a
memorandum would not be an instrument of mortgage.
A memorandum reducing other terms and conditions
with regard to the deposit in the form of a
document, however, shall require registration under
Section 17(1)c) of the Registration Act, but in a
case in which such a document does not incorporate
any term and condition, it is merely evidential and
does not require registration.
This Court had the occasion to consider this
question in the case of Rachpal v. Bhagwandas, AIR
37 1950 SC 272, and the statement of law made
therein supports the view we have taken, which
would be evident from the following passage of the
judgment:
“4. A mortgage by deposit of titledeeds
is a form of mortgage recognized
by S. 58(f), T.P. Act, which provides
that it may be effected in certain
towns (including Calcutta) by a person
“delivering to his creditor or his
agent documents of title to immovable
property with intent to create a
security thereon.” That is to say,
when the debtor deposits with the
creditor the title-deeds of his
property with intent to create a
security, the law implies a contract
between the parties to create a
mortgage, and no registered instrument
is required under S.59 as in other
forms of mortgage. But if the parties
choose to reduce the contract to
writing, the implication is excluded
by their express bargain, and the
document will be the sole evidence of
its terms. In such a case the deposit
and the document both form integral
parts of the transaction and are
essential ingredients in the creation
of the mortgage. As the deposit alone
is not intended to create the charge
and the document, which constitutes
the bargain regarding the security, is
also necessary and operates to create
the charge in conjunction with the
deposit, it requires registration
under S.17, Registration Act, 1908, as
a non-testamentary instrument creating
an interest in immovable property,
where the value of such property is
one hundred rupees and upwards. The
time factor is not decisive. The
document may be handed over to the
creditor along with the title-deeds
and yet may not be registrable……”
This Court while relying on the aforesaid
judgment in the case of United Bank of India v.
M/s. Lekharam Sonaram & Co.,AIR 1965 SC 1591
reiterated as follows:
“7. …………It is essential to bear in
mind that the essence of a mortgage by
deposit of title-deeds is the actual
handing over by a borrower to the
lender of documents of title to
immovable property with the intention
that those documents shall constitute
a security which will enable the
creditor ultimately to recover the
money which he has lent. But if the
parties choose to reduce the contract
to writing, this implication of law is
excluded by their express bargain, and
the document will be the sole evidence
of its terms. In such a case the
deposit and the document both form
integral parts of the transaction and
are essential ingredients in the
creation of the mortgage. It follows
that in such a case the document which
constitutes the bargain regarding
security requires registration under
Section 17 of the Indian Registration
Act, 1908, as a non-testamentary
instrument creating an interest in
immovable property, where the value of
such property is one hundred rupees
and upwards. If a document of this
character is not registered it cannot
be used in the evidence at all and the
transaction itself cannot be proved by
oral evidence either…….”
Bearing in mind the principles aforesaid, we
proceed to consider the facts of the present case.
It is relevant here to state that letter dated 29th
March, 2007 of the Finance Commissioner inter alia
makes “instrument of deposit of title-deeds
compulsorily registrable under Section 17(1)(c) of
the Registration Act.” In such contingency,
registration fee and stamp duty would be leviable.
But the question is whether mortgage by deposit of
title-deeds is required to be done by an instrument
at all. In our opinion, it may be effected in
specified town by the debtor delivering to his
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creditor documents of title to immoveable property
with the intent to create a security thereon. No
instrument is required to be drawn for this
purpose. However, the parties may choose to have a
memorandum prepared only showing deposit of the
title-deeds. In such a case also registration is
not required. But in a case in which the memorandum
recorded in writing creates right, liability or
extinguishes those, same requires registration. In
our opinion, the letter of the Finance Commissioner
would apply in cases where the instrument of
deposit of title-deeds incorporates terms and
conditions in addition to what flow from the
mortgage by deposit of title-deeds. But in that
case there has to be an instrument which is an
integral part of the transaction regarding the
mortgage by deposit of title-deeds. A document
merely recording a transaction which is already
concluded and which does not create any rights and
liabilities does not require registration. Nothing
has been brought on record to show existence of any
1Page 14
instrument which has created or extinguished any
right or liability. In the case in hand, the
original deeds have just been deposited with the
bank. In the face of it, we are of opinion that
the charge of mortgage can be entered into revenue
record in respect of mortgage by deposit of titledeeds
and for that, instrument of mortgage is not
necessary. Mortgage by deposit of title-deeds
further does not require registration. Hence, the
question of payment of registration fee and stamp
duty does not arise. By way of abundant caution
and at the cost of repetition we may, however,
observe that when the borrower and the creditor
choose to reduce the contract in writing and if
such a document is the sole evidence of terms
between them, the document shall form integral part
of the transaction and same shall require
registration under Section 17 of the Registration
Act. From conspectus of what we have observed
above, we do not find any error in the judgment of
the High Court.
1Page 15
In the result, we do not find any merit in the
appeal and it is dismissed accordingly but without
any order as to costs.
CIVIL APPEAL NO.9049 OF 2013 (@SLP (C) NO. 924/2009)
Delay condoned.
Leave granted.
By the impugned order, the High Court had
directed the appellants herein to enter mutation in
favour of Punjab National Bank in respect of the
properties mortgaged by deposit of title-deeds.
According to the appellants, the properties
mortgaged by deposit of title-deeds are situated in
the village Matab Garh in the District of Ludhiana
and at village Dallomajra, Tahsil and District
Fatehgarh Sahib and village Sadhugarh in the
District Sirhind.
It is the stand of the appellants that deposit
of the title-deeds are not in relation to the
1Page 16
properties situated in the towns specified under
Section 58(f) or in the towns notified by the State
Government in terms of Section 58 of the Transfer
of Property Act. In this connection, our attention
has been drawn to the notification dated May 26,
2003 of the Government of Punjab in the Department
of Revenue and Rehabilitation, same reads as
follows:
“In exercise of the power conferred by
clause (f) of Section 58 of the
Transfer of Property Act, 1882
(Central Act No. 4 of 1882) and all
other powers enabling him in this
behalf, the Governor of Punjab is
pleased to specify Gobindgarh in the
district Fatehgarh Sahib and Mohali in
District Roop Nagar in the State of
Punjab as Towns for the purpose of the
aforesaid section of the said Act.”
This aspect of the matter has not been
considered by the High Court in the impugned
judgment. As the same goes to the root of the
matter, we have no option than to set aside the
impugned order and remit the matter back for its
1Page 17
fresh consideration in accordance with law in the
light of the observation made above.
In the result, we allow this appeal, set aside
the impugned judgment of the High Court and remit
the matter back to the High Court for fresh
consideration in accordance with law.
………..………..……………………………….J.
(CHANDRAMAULI KR. PRASAD)
………………….………………………………….J.
(KURIAN JOSEPH)
NEW DELHI,
OCTOBER 7, 2013.
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