LexVEERAMACHINENI GANGADBARA RAO versus ANDHRA BANK LTD. & ORS.
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VEERAMACHINENI GANGADBARA RAO "· ANDHRA BANK LTD. & ORS. March 25, 1971 [K. S. HEGDE AND A. N. GR.OVER, JI.] Indian Registration Act, 1908, s. 17-Mortgage by deposit of title deeds-Document evidencing mortgage when must be registered-Docuntent which itself does not create contract but is only memorandum of contract already entered into need not be registered-Further evidence to prove tcrins of agreement not barred by ss. 91 & 92 Evidence Act, 1872. The respondent Bank gave a loan to Godavari Sugars Refiners Ltd., of which defendants 1 to 3, as partners, were managing agents. Subsequ- ently the bank filed a suit for the recovery of the loan. The appellant, a brother of defendant No. I, was impleaded as defendant No. 4 and Goda- vari Sugars as defendant No. S. The suit was decreed and the decree ivas upheld by the High Court. Only Def!ndant No. 4 appealed to this Court. The decree against the appellant was passed on the basis of Exh. 1-6, o document which was signed by Defendants 1 & 4 and in which it was recorded that the title deeds Exbs. A-7 and Exh. A-8 had been deposited with the respondent bank as security for money due. According to the appollant the said title deeds bad been deposited by him as security for a loan given to him by the bank in his individual capacity, and that the signature of defendant no. 1 had been appended to Exh. A-6 only because he had an interest in one of the properties covered by Exhs. A-7 and A-8. HELD : If the parties intend to reduce their bargain regarding the de- posit of title deeds to the form of a document the document requires re- gistration. If on the other hand its proper construction and the surround- ing ~ircumstances lead to the conclusion that the parties did not intend to do so, then, there being no express bargain the contract to create a mort- gage arises by implication of the law from the deposit itself \\"ith the re- quisite int$ntion, and the document being merely evidential does not re- quire registration. [220H-221A] Rachpal Maharaj v. Bhagwandas Daruka & Ors .. [1950] S.C.R. 548, • l'<mjivandas Mehta v. Chan Ma Phee, L.R. 43 I.A. 123, Shaw v. Foster, (!Sn) L.R. 5 H. L. 321, 341 and S11bramonian & Anr v. Lutchman & Ors., 50 I.A. 77, applied. The language of Ex. ·A-6 was undoubtedly wide and if it governed the agreement between the parties then there could be no doubt that the suit debts were also secured by the deposit of title deeds A-7 and A-8. But Ex. A-6 could not be considered a contract governing the rights of the parties because: (a) it was incomplete inasmuch as certain unnecessary \\"ords which were meant to be struck' out were not actually struck out; (b) while according to the plaintiff the appellant agreed to secure the debt due from the first defendant to the Bank in consideration of the Bank not pro- ceeding against defendants 1 to 3, no such term was found in Ex. A-6; (c) from the recitals of Ex A-6 it was seen that the memorandum in ques- tion was intended to 'put on record' the terms already agreed upon. If the parties intended that the document should embody the contract between them it would have been necessary to register the same under s. 17 of the Registration ~ct, 1908. [220A-D] 14-1 S. C. lndia/71 29& B c D E F G H 210 A B c SUPREME COURT REPORTS [1971] SUPP. s.c.R. Exhibit A-6. was not .1iegistered. If. that dq~ument was considered as a contract of mortgage between the Bank arid· tne depositors; the san1e not having been registered it was inadmissible in evidence. If on the other hand that document was considered as a mere memorandum evidencing the deposit of title deeds in pursuance of an cEµ"lier contrac,t then the correct· ness of the recitals therein could be gone into without being inhibited by ss. 91 and 92 of the Evidence Act. Whichever view was taken the plaintilI"s case must fail. On an overall consideration of the evidence and probabilities of the case it was established that Exhs. A·7 and A·S were not deposited with the Bank to secure the debts due from defendant No. I to the Bank. (222C-E] The appeal must accordingly be allowed. Ov!L APPELLATE JURISDICTION: Civil Appeal No. 786 of 1966. Appeal by special leave from the judgment and order dated June 9, 1964 of the Andhra Pradesh High Court in Appeal No. 96 of 1969. K. R. Chaudhuri, for the appellant. D B. V. Subramanyam, A. Subba Rao'for A. V. Rangam, for E G H respondent No. I. The Judgment of the C
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