# The jtidgrμent of the Court was delivered by 19"50 Rach pa!, Mahraj v. Bha.~wandas DarUka And Others

- **Citation:** [1950] 1 S.C.R. 548
- **Court:** Supreme Court of India
- **Decided:** 1947-03-11
- **Case number:** Civil Appeal No. LXVII of 1949
- **Bench:** SHRI HARILAL KANIA c. J
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-jtidgr-ent-of-the-court-was-delivered-by-19-50-rach-pa-mahraj-v-bha-wandas-137
- **Pages:** 6

## Headnote

PATANJALI SASTRI
and DAs J J.]
(1950]
Indian Registration Act (XVI of 1908), s. 17-Transfer of
Property Act (IV of 1882), s. 58 (f)-Memorandum of deposit
of title deeds-When compulsorily registrable.
The question
whether
a
memorandum
of
deposit of title
deeds is compulsorily registrable under section 17 of the Indian
Registration Act,
1908, as an instrument creating an interest in
immoveable property, depends on whether the parties intended to
reduce their bargain regarding the deposit
to
the
form
of
a
document.
If so, the
document requires registration. If, on the
other hand, its proper construction and the surrounding circun1stances lead to the
conclusion
that
the oarties did not intend to
do so,
there being no express bargain; the contract to create
the
mortg~ge arises by implication of the law
from the deposit
itself
with the
requisite
intention,
and
the
document,
being
merely evidential
does
not require
registration. The time factor
is not decisive.
Where accounts relating to the appeilant's dealings with the
respondents were taken on a certain date and the appellant gave
certain title dee9s to the respondents for being held as security
for
the amounts then found due and \.vhich may become due, and
on
the
satne
day the appellant gave a
memorandum
to the
respondents in the form of a letter addressed to tlie respondents
\.Vhich
stated :
"We
write
to put on record that to secure the
repay1nent of the money already due to you from us on account
of the
business
transactions
bet\veen
yourselves and ourselves
and the monev that mav hereafter beco1ne
due on account of
such · transactio~s we
have
this
day
deposited
with
you
the
following title deeds relating to our properties at ...... with i11tent to
create an equitable mortgage on the said properties to
secure
all moneys including interest that may be found due .... " ·
Held that the parties <lid not intend to create a charge by
the • execution of the document, but merelv to record a transaction
which had already
been
concluded
and
under which
rights
and
liabilities had already
been created and the document
did
not require registration.
'
S.C.R.
SUPREME COURT REPORTS
549
Obla Sundarachariar v. Narayana Ayyar (58 I. A. 68) and
Hari Sank,_ar Paul v. Kedar Nath Saha (66 I. A. 184) referred to.
APPEAL (Civil Appeal No. LXVII of 1949 from a
Judgment and Decree of the High Court of Judicature
at Patna dated the 11th March, 1947, in F. A. No. 218
of 1944. The material facts appear from the judgment.
Shiva Prasad Sinha (Sri Kishan, with him) for the
appellant.
B. K. Saran for the 1st respondent.
Respondents 2 to 13 did not enter appearance.
1950. May 5.
The jtidgrμent of the Court was
delivered by
19"50
Rach pa!,
Mahraj
v.
Bha.~wandas
DarUka
And Others
PATANJALI
SASTRI
J.-This appeal arises
out of
Pataiyali Sn,tri ].
a
suit brought by the respondents against the appellant and other members of 11is
joint family to enforce
a mortgage alleged to have been created by the a11pellant by deposit of title deeds on the 23rd October,
1936,
at Calcutta.
The short point for determination in the appeal
1s
whether
the memorandum
signed
and delivered
by
the appellant on 23rd October,
1936, and relied upon
by the respondents as evidencing
the
cre:.ll ion
of tne
mortgage was compulsorily registrable under section
17
of the Indian Registration Act, 1903, and, not ha1ing
been registered, was
inadmissible in evidence to prove
the mortgage.
The Subordinate
Judge of Darbha!1ga
who tried the suit,
and the High Court at Patna on
appeal,
held that the document did not require registration 1md was admissible in evidence,
and accordingly
<lecrcnl the suit.
The question turns on the proper construction ot
die memorandum and the circumstances under ·which
it was delivered to the respondents.
Accorrling to the
evidence of the respondents'
witnesses which has been
accepted by the Courts below,
the accounts relating to
the appellant's dealings were examined on the 23rd
October,
1936,
and a large sum was found due to

## Text

1950
M<g 5
548
SUPREME COURT REPORTS
RACHPAL MAHRAJ
"·
BHAGW ANDAS. DARUKA
and OTHERS
[SHRI HARILAL KANIA c. J.,
PATANJALI SASTRI
and DAs J J.]
(1950]
Indian Registration Act (XVI of 1908), s. 17-Transfer of
Property Act (IV of 1882), s. 58 (f)-Memorandum of deposit
of title deeds-When compulsorily registrable.
The question
whether
a
memorandum
of
deposit of title
deeds is compulsorily registrable under section 17 of the Indian
Registration Act,
1908, as an instrument creating an interest in
immoveable property, depends on whether the parties intended to
reduce their bargain regarding the deposit
to
the
form
of
a
document.
If so, the
document requires registration. If, on the
other hand, its proper construction and the surrounding circun1stances lead to the
conclusion
that
the oarties did not intend to
do so,
there being no express bargain; the contract to create
the
mortg~ge arises by implication of the law
from the deposit
itself
with the
requisite
intention,
and
the
document,
being
merely evidential
does
not require
registration. The time factor
is not decisive.
Where accounts relating to the appeilant's dealings with the
respondents were taken on a certain date and the appellant gave
certain title dee9s to the respondents for being held as security
for
the amounts then found due and \.vhich may become due, and
on
the
satne
day the appellant gave a
memorandum
to the
respondents in the form of a letter addressed to tlie respondents
\.Vhich
stated :
"We
write
to put on record that to secure the
repay1nent of the money already due to you from us on account
of the
business
transactions
bet\veen
yourselves and ourselves
and the monev that mav hereafter beco1ne
due on account of
such · transactio~s we
have
this
day
deposited
with
you
the
following title deeds relating to our properties at ...... with i11tent to
create an equitable mortgage on the said properties to
secure
all moneys including interest that may be found due .... " ·
Held that the parties <lid not intend to create a charge by
the • execution of the document, but merelv to record a transaction
which had already
been
concluded
and
under which
rights
and
liabilities had already
been created and the document
did
not require registration.
'
S.C.R.
SUPREME COURT REPORTS
549
Obla Sundarachariar v. Narayana Ayyar (58 I. A. 68) and
Hari Sank,_ar Paul v. Kedar Nath Saha (66 I. A. 184) referred to.
APPEAL (Civil Appeal No. LXVII of 1949 from a
Judgment and Decree of the High Court of Judicature
at Patna dated the 11th March, 1947, in F. A. No. 218
of 1944. The material facts appear from the judgment.
Shiva Prasad Sinha (Sri Kishan, with him) for the
appellant.
B. K. Saran for the 1st respondent.
Respondents 2 to 13 did not enter appearance.
1950. May 5.
The jtidgrμent of the Court was
delivered by
19"50
Rach pa!,
Mahraj
v.
Bha.~wandas
DarUka
And Others
PATANJALI
SASTRI
J.-This appeal arises
out of
Pataiyali Sn,tri ].
a
suit brought by the respondents against the appellant and other members of 11is
joint family to enforce
a mortgage alleged to have been created by the a11pellant by deposit of title deeds on the 23rd October,
1936,
at Calcutta.
The short point for determination in the appeal
1s
whether
the memorandum
signed
and delivered
by
the appellant on 23rd October,
1936, and relied upon
by the respondents as evidencing
the
cre:.ll ion
of tne
mortgage was compulsorily registrable under section
17
of the Indian Registration Act, 1903, and, not ha1ing
been registered, was
inadmissible in evidence to prove
the mortgage.
The Subordinate
Judge of Darbha!1ga
who tried the suit,
and the High Court at Patna on
appeal,
held that the document did not require registration 1md was admissible in evidence,
and accordingly
<lecrcnl the suit.
The question turns on the proper construction ot
die memorandum and the circumstances under ·which
it was delivered to the respondents.
Accorrling to the
evidence of the respondents'
witnesses which has been
accepted by the Courts below,
the accounts relating to
the appellant's dealings were examined on the 23rd
October,
1936,
and a large sum was found due to the
respondents who deman<lcJ payment.
The
appelhnt
thereupon brought aml gave certain documents, being
1950
Rach pal
Mahraj
v.
Bhagwandas
Daruka
And Others
Patanjali Sastri ].
550
SUPREME COURT REPORTS
[1950]
title deeds relating to immovable
properties belonging
to his family,
for the purpose of being held as security
for the amounts then due and to become due on
further dealings.
A draft of the memorandum was
thereafter prepared which the appellant took with
him to be shown to his lawyer and he returned in
the
afternoon, and signed and delivered it to the respondents.
All this took place in Calcutta.
The memorandum is in the form of a letter addressed to the
respondents' firm and is in the following terms :
"We write to put on record that to secure the repayment of the money already due to you from us on
account of
the
business . transactions
between
yourselves and ourselves and the money that may hereafter become
due
on account of
such
transactions
we have this day deposited with you the following title
deeds in Calcutta at your . place of business at No. 7
Sambhu Mullick Lane,
relating to our properties at
Samastipur with
intent
to create
an.
equitable
mortgage on the
said properties to secure all moneys
including interest that may be found due and payable
by us to you on account of the said transactions ........ "
A mortgage by deposit of title deeds is a form of
mortgage recognised by section 58 (f) of the Transfer
of Property 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 tg 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 Section
59 as
in
other forms of mortgage.
But if the parties choo,se 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
...
S.C.R.
SUPREME COURT REPORTS
551
constitutes the bargain regarding the ~ecurity,
is
also
necessary arid operates to create the charge in conjunction with the deposit,
it 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.
The time factor is
not decisive.
The document may be handed over to
the creditor along with the titl,e deeds and yet may not
be registrable, as in Obla Sundarachariar v. Narayana
Ayyar ( 1 ) Or,
it may be delivered at a later dated and
nevertheless be registrable,
as in Hari Sankar Paul v.
Kedar Nath Saha (2 )
The crucial question is: Did
the parties intend to reduce ·their bargain regarding
the deposit of the title deeds to the form of a document ?
If so,
the document requires registration.
If,
on the other hand,
its proper construction
and
the
surrounding circumstances lead to the conclusion that
the parties did not intend ·to do so,
t;Jien,
there being
no express bargain,
the contract to create the mortgage
arises by implication of the . law from . the deposit itself
with the requisite intention,
and the document, being
merely evidential does not require registration.
There are numerous decisions,
some of them not
easy to reconcile,
where this question was considered
with reference to the document concerned in the particula:r case.
It is unnecessary to review them,
as the two
latest pronouncements of the Privy Council,
to which
reference has been made,
aptly illustrate cases falling
on either side of the line.
In Obla Sundarachariar v.
Narayana Ayyar ( 1 )
a signed memorandum was delivered to the mortgagee along with the title deeds of
cei:tain i;roperties deposited as security.
The merrioran-.
dum stated "As agreed upon in person, I have delivered
to you the
under-mentioned
documents
as security,"
and listed the title deeds deposited.
It was held that
the memorandum was no more than a mere record of
the particulars of the deeds and did not require registration.
The criterion. applied was : "No such memorandum can be within the section (section 17 of the Registration i\ct) unless on its face it embodies such terms
( 1) 58 I.A. 68.
(') 66 I.A 184.
1950
RochJal
Ma/irqj
v.
Bhagwandas
D41'11ko
And Othtrs
Patanjali Saslri J.
1950
Roehpal
MalrT'!f
v.
Blu1gwandas
DOTuka
And Others
PaJahjali Sastri J.
552
SUPREME COURT REPORTS
[1950J
and is signed and delivered at such time and place and
in such circumstances
as to lead legitimately to
the
conclusion that,
so far as the deposit is concerned,
it
constitutes
the
agreement
between the parties."
In
Hari Sankar Paul v. Kedar Nath Saha (')
the title
deeds were deposited accompanied by a memorandum
~
'part of the advance
arranged
for
was
made.
So!lle days
later
when
the balance
was advanced,
another
memorandum was delivered superseding the
earlier one,
and this
was a formal document stating
the essential terms of the transaction
"hereby agreed"
and referred to the moneys
"hereby secured".
It also
conferred an express power
of sale on the
mortgagee.
Lord Macmillan,
after reviewing the eariler decisions
of the Board,
held that the document required registration, observing,
"where, as here, the parties professing to create a mortgage by a deposit of title deeds
contemporaneously enter into a contractual
agreement,
in writing,
whiih is made · an integral
part of the
transaction,
and is itself an operative instrument and
not merely evidential, such
a document must.
under
the statute, be registered."
Turning now to the memorandum before us,
1t 1s
clear,
on the face of it,
that the parties did not intend
thereby to create the charge.
The document purports
only to record a transaction which had been concluded
and under which the rights and
li~bilities had been
orally agreed upon.
No doubt it was taken by the
respondents to show that the title deeds of the appellant's properties were deposited with them as security
for the moneys advanced by them,
and to obviate a
possible plea that the deeds were left with them for
other purposes,
as indeed was contended by the appellant in his written statement,
taking. advantage of the
non-registration of the memorandum in question.
But
that is far from intending to reduce the bargain to
writing and make the document the basis of the rights
and liabilities of the parties.
In agreement
with the
High Court,
we are of opinion, that the memorandum
delivered by the appellant along with the title deeds
('). 66 LA. 1~4.
,
$.c.R.
SUPREME COURT REPORTS
553
deposited with the respondents
did not require
registration and was properly admitted in evidence to prove
the creation of the charge.
The appeal fails and is dismissed with costs.
Appeal dismissed.
Agent for the appellant: Tarachand Brijmohanlal.
Agent for respondent No. 1 : S. P. Varma.
I
THE NEW PIECEGOODS BAZAR CO., LTD.,
BOMBAY
ti.
THE COMMISSIONER OF INCOME-TAX,
BOMBAY
[SAIYID FAZL ALI, PATANJALI SASTRI,
MEHR CHAND MAHAJAN and
, MUKHERJEA JJ.]
Indian Income-tax Act (XI of 1922), s. 9(1) (iv)-Income from
pt"Operty-Computation-Deductions-"Annual
charge .not
being
capital
charge"-"Annual charge" ·and
'~capital .charge",
mean-·
ittgi of-Charge for. municipal . property tax and urban immoveable
pro,,my tax-Whether deductible--City of Bombay Municipal Act,
1888, s. 212--,-Bombay Finance Act, I 932, s. 22.
The charge created in respect of municipal property tax by
s. 212 af the City of Bombay Municipal Act, 1888, is an "annual
charge not being a capital charge" within the meaning of s. 9 ( 1)
(it) of the Indian Income-tax Act, 1922, and the amount of such
charge should therefore be deducted in computing the income from
such property for the purposes of .s- 9 of the Indian Income tax Act.
The charge in . respect
of urban
immoveable property tax
created by the Bombay Finance Act, 1932, is similar in character
and the amount of such charge should also be deducted_
Tl* expression
"capital charge"
in s.
9 (1) (iv) means
a
charge created for a capital sum, that is to say, a charge created to
secure the discharge of a liability of a capital nature; and an
"annual charge" means a charge to secure an annual liability.
1950
R~
Mfl"'qj
v.
· Bliagwandas
Daruka
AtttJ Othm
P atanjali Sastri J.
1950
May26