LexK. J. NATHAN versus S. V. MARUTY REDDY AND OTHERS
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Ci S.C.R. SUPREME COURT REPORTS K. J. NATHAN v. S. V. MARUTY REDDY AND OTHERS (K. SUBBA RAO AND J. R. MUDHOLKAB JJ.) Mortgage-Mortgage by depolit of title deeh-No document ezec11t•d on tM day of deposit-<:an intention be infe"ed flom 4 Md subsequently '1tecuted and registered-Transfer t1f Pra~rty .4ct (Act No. IV of 1882), 1. 58(/). The plaintiff-appellant filed a suit to enforce a mortgage by deposit of title deeds. The case of the plaintil! was that on 10th May, 1947, the 1st defendant deposited with the plaintiff al Madras other title deedl and papers relating to his half share in items specified in Schedule 'B' attached to the plaint with intent to create a security over the same in respect of advances made by the plaintilf. Before the 10th May, 1947, the 1st defendant borrowed from the plaintiff from time to time Rs. J 6,SOO/- on 7 promissory notes. The case of the plaintiff further was that the 1st defendant executed a memorandum of agreement, dated Sth July, 1947, in which the equitable mortgage thus created and the amount borrowed by him till ·then were acknowledged and he had undertaken to repay the said sum of Rs. 16,SOO/- with interest This memorandum of agreement had been duly registered. This suit was for recovery of the principal amount of Rs. 16,SOO/- and interest thereoll- The !st defendant did not file any written statement denying the said allegations. The 3rd defendant (a subsequent mortgagee), the only contesting defendant, filed a written statement wherein he put the plainlilf to strict proof of the fact tllat the sums claimed in the plaint were due to him from the !st defendant and of the fact that the !st defendant effected a mortgage in his favour by deposit of title deeds. The Trial Court held that the 1st defendant had no intention to create a mortgage by deposit of title deeds on May JO, 1947. On appeal the High Court also affirmed the finding of the trial Court The question for con- sideration was whether on 10th May, 1947, there was a loan and whether the 1st defendant delivered to the appellant the documents of title of B Schedule properties with the intent to create a security thereon. Held: (i) Under the Transfer of the Property Act, a mortgage by deposit of title deeds is one of the forms of mortgap whereunder there is a transfer of interest in specific immovable property for the purpose of securing payment of money advanced or to be advanced by way of loan. Therefore, such a mortgage of property takes effect against a mortgage deed subsequently executed and registered in respect of the same property under Section S8(f) of the Transfer of Property Act. The three requisites of a mortgage by deposit of title deeds are, (i) debt, (ii) deposit of title deeds, and (iii) an intention than the deeds shall be security for the debt. Whether there is an intention that the deedl shall be security for tho debt is a question of fact in each case. 11111 1961 - F1bntt1r7 II. 1961 -·- K. J. Nathan T. S. Y. Maruty lWdy SUPREME COURT REPORTS [1g64] said fact will have to be decided on the basis of the evidence. TheR> is no presumption of law that the mere deposit of title deeds constitutes a mortgage, for no such presumption has been laid down either in the Evidence Act or in the Transfer of Property Act. But a court may presume under section 114 of the Evidence Act that under certain circumstances a loan and a deposit of title deeds constitute a mortgage. But that is really an inference as to the existence of one fact from the existence of some other fact or facts. Nor the fact that at the time the title deeds were deposited there was an intention to execute a mortgage deed in itself negatives, or is inconsistent with, the intention to create a mortgage by deposit of title deeds to be in force till the mortgage deed was executed, On the facts of this case the intention to create a mortgage by deposit of title deeds can be inferred from the document dated 5th July, 1947 which was subsequently registered and in which the deposit of title deeds on May 10. 1947 was duly acknowledged. Norris v. Wilkinson, (1806) 33 E.R. 73, Keys v. Williams, (1838) 51 Revised Reports, 339, Whitbread, Ex Parte, (1912) 34 E.R. 496, In re. Beetham, Ex Parle Broderick, (1886) 18 Q.B.D. 380, Dayal Jairaj v. Jivraj Ratai1si, (1875) l.L.R. 1 Born. 237, Jaitha Bhima v. Haji Abdul Vyad Cosman, (1886) I.L.R. 10 Bom. 634, Behram Bashid Irani v. Sorabj
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