LexHARYANA FINANCIAL CORPORATION versus GURCHARAN SINGH & ANR.
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A B [2013] 12 S.C.R. 832 HARYANA FINANCIAL CORPORATION V. GURCHARAN SINGH & ANR. (Civil Appeal No. 11028 of 2013) DECEMBER 13, 2013 [K.S. RADHAKRISHNAN AND C. NAGAPPAN, JJ.] Transfer of Property Act, 1882: c s.100 r!w s.59 - Charges - Undertaking given against loan that properties mentioned therein shall not be disposed of during the currency of the loan - Documents not registered - Held: A conjoint reading of s.100 with s.59 makes it clear that if by act of parties, any immovable property is made 0 security for the payment of money to another and it does not amount to mortgage, then all the provisions which apply to a simple mortgage, as far as may be, apply to such charge - Consequently, in view of s. 59, when there is a mortgage other than a mortgage by deposit of title deeds, it can be effected only by a registered instrument - The mere undertaking that E the party will not dispose of the properties mentioned in the said undertaking, during the currency of the loan, will not create any charge over those properties, unless charge is created by deposit of title deeds or through a registered document - A mere undertaking to create a mortgage is not F sufficient to create an interest in an immovable property - In the instant case, no registered mortgage deed was executed by the first respondent and no title deed of the property was handed over by him to Corporation - Therefore, there is no error in the judgment of first appellate court as G affirmed by High Court that the loan taken by first respondent was not subject to charge over the property covered by the decree in favour of second respondent. Respondent no. 1 gave a written undertaking dated H 832 HARYANA FINANCIAL CORPORATION v. 833 GURCHARAN SINGH 5.3.1994, as security against a loan obtained from the A appellant-Corporation, that he would not dispose of his properties enumerated therein during the currency of the loan. On his failure to repay the loan, the appellant took over the hypothecated properties, sold the same and appropriated the amount. Respondent no. 2, the wife of B respondent no. 1, filed Civil Suit no. 767 of 1995 seeking a declaration that she was the absolute owner and in possession of the properties mentioned in the undertaking dated 5.3.1994. The suit was decreed against respondent no. 1 on 3.2.1996. The appellant-Corporation c filed a suit seeking a declaration that the decree dated 3.2.1996 was null and void. The trial court held that the decree in the suit filed by respondent no. 2 was a collusive one'Obtained to defeat the undertaking dated 5.3.1994. However, the first appellant court allowed the 0 appeal of respondent no. 2 holding that the loan taken by respondent no. 1 was n9t subject to charge over the I ~ -· property covered by the decree in favour of respondent no. 2. The High Court dismissed the appeal of the Corporation. Dismissing the appeal, the Court HELD: 1.1. Section 100 of.Transfer of Property Act, 1872 clearly indicates the folloiNing types of charges : (i) Charges created by act of parties; and (ii) Charges arising by operation of law. An ordinary charge created under the Transfer of Property Act is compulsorily registerable. The first portion of s.100 lays down that where immoveable property of one person is by act of parties E F or operation of law made security for the payment of G money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions which apply to a simple mortgage sh;ill, so far as may be, apply to such charge. [para 9] [840-H; 841-A-C] H 834 SUPREME COURT REPORTS [2013] 12 S.C.R. A 1.2. A conjoint reading of s.100 with s.59 of the TP Act makes it clear that if by act of parties, any immovable property is made security for the payment of money to another and it does not amount to mortgage, then all the provisions which apply to a simple mortgage, as far as B may be, apply to such charge. Consequently, in view of s.59 of the TP Act, when there is a mortgage other than a mortgage by deposit of the title deeds, it can be effected only by a registered instrument. So far as the instant case is concerned, no registered mortgage deed was executed c by the first respondent and no title deed of the property was handed over by him to the Corporation. A mere undertaking to create a mortgage is not sufficient to create an interest in
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