1 IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL ORIGINAL ORIGINAL CIVIL JURISDICTION CIVIL JURISDICTION CIVIL JURISDICTION CHAMBER CHAMBER CHAMBER SUMMONS NO. 155 OF 2006 SUMMONS NO. 155 OF 2006 SUMMONS NO. 155 OF 2006 IN IN IN E.A. E.A. E.A. NO.96 NO.96 NO.96 OF 2000 OF 2000 OF 2000 IN IN IN ARBITRATION ARBITRATION ARBITRATION CASE CASE CASE NO.19 OF 2000 NO.19 OF 2000 NO.19 OF 2000 Dinesh Dinesh Dinesh Shah Shah Shah ...... Plaintiff Plaintiff Plaintiff vs vs vs Ravi Ravi Ravi Sharma Sharma Sharma ...... Defendant Defendant Defendant & Dena Dena Dena Bank Bank Bank ...... Intervener Intervener Intervener Mr.H.K.Gada Mr.H.K.Gada Mr.H.K.Gada with with with Ms.Yogini Gada i.b Harakhchand Ms.Yogini Gada i.b Harakhchand Ms.Yogini Gada i.b Harakhchand & Co Co Co for Plff for Plff for Plff Mr.D.Shukla Mr.D.Shukla Mr.D.Shukla i/b i/b i/b Shukla & Shukla & Co for Interv. Shukla & Shukla & Co for Interv. Shukla & Shukla & Co for Interv. Mr.S.A.Bhagwat Mr.S.A.Bhagwat Mr.S.A.Bhagwat with Ms.Anjali i.b.Law with Ms.Anjali i.b.Law with Ms.Anjali i.b.Law Locus Locus Locus for for for defendant defendant defendant CORAM CORAM CORAM : : : SMT R.S.DALVI, J SMT R.S.DALVI, J SMT R.S.DALVI, J DATE DATE DATE : : : 2nd February, 2007 2nd February, 2007 2nd February, 2007 JUDGMENT JUDGMENT JUDGMENT (PER (PER (PER SMT. R.S. DALVI,J.) SMT. R.S. DALVI,J.) SMT. R.S. DALVI,J.) 1.1.1. This Chamber Summons is taken out by the This Chamber Summons is taken out by the This Chamber Summons is taken out by the applicant/Intervener applicant/Intervener applicant/Intervener Bank for raising the Bank for raising the Bank for raising the attachment attachment attachment levied by the plaintiff over the levied by the plaintiff over the levied by the plaintiff over the mortgaged mortgaged mortgaged property which is gala No.301-C,in Viren property which is gala No.301-C,in Viren property which is gala No.301-C,in Viren Light Light Light Industrial Premises Cooperative Society Ltd Industrial Premises Cooperative Society Ltd Industrial Premises Cooperative Society Ltd on on on plot No.408 Mogul Lane, Mahim, Mumbai-400 016. plot No.408 Mogul Lane, Mahim, Mumbai-400 016. plot No.408 Mogul Lane, Mahim, Mumbai-400 016. The The The Intervener Intervener Intervener claims to be the secured creditor of claims to be the secured creditor of claims to be the secured creditor of the the the defendant defendant defendant under a mortgage decree by deposit of under a mortgage decree by deposit of under a mortgage decree by deposit of title title title deeds deeds deeds with the with the with them. The Intervener has produced The Intervener has produced The Intervener has produced the the the title deeds deposited with the Intervener title deeds deposited with the Intervener title deeds deposited with the Intervener enumerated enumerated enumerated in a Memorandum of Understanding. These in a Memorandum of Understanding. These in a Memorandum of Understanding. These are are are contained in contained in contained in: 2 (a) (a) (a) an agreement on an adhesive stamp paper an agreement on an adhesive stamp paper an agreement on an adhesive stamp paper of of of Rs.5/- Rs.5/- Rs.5/- for the aforesaid property showing for the aforesaid property showing for the aforesaid property showing receipt receipt receipt by the vendor who was the earlier by the vendor who was the earlier by the vendor who was the earlier owner owner owner of the said gala for Rs.30,500/- of the said gala for Rs.30,500/- of the said gala for Rs.30,500/- received received received from the defendant by cheque No. from the defendant by cheque No. from the defendant by cheque No. 384607 384607 384607 of United Commercial Bank Matunga, of United Commercial Bank Matunga, of United Commercial Bank Matunga, Mumbai. Mumbai. Mumbai. The agreement further shows the The agreement further shows the The agreement further shows the declaration declaration declaration of the vendor that he has not of the vendor that he has not of the vendor that he has not created created created any lien or entered into any any lien or entered into any any lien or entered into any agreement agreement agreement on the same unit and that the on the same unit and that the on the same unit and that the defendant defendant defendant in the suit shall abide by the in the suit shall abide by the in the suit shall abide by the rules rules rules and regulations of the society. The and regulations of the society. The and regulations of the society. The agreement agreement agreement further shows that a letter further shows that a letter further shows that a letter requesting requesting requesting the secretary of the society to the secretary of the society to the secretary of the society to transfer transfer transfer the share certificates to the name the share certificates to the name the share certificates to the name of of of the defendant is attached with the said the defendant is attached with the said the defendant is attached with the said agreement. agreement. agreement. The agreement is signed by the The agreement is signed by the The agreement is signed by the vendor vendor vendor and and and the defendant. the defendant. the defendant. (b) (b) (b) The share certificate of the society The share certificate of the society The share certificate of the society bearing bearing bearing No. 44 under membership Regulation No. 44 under membership Regulation No. 44 under membership Regulation No.10 No.10 No.10 for 5 shares of the society is shown for 5 shares of the society is shown for 5 shares of the society is shown toto to be transferred to the name of the be transferred to the name of the be transferred to the name of the defendant. defendant. defendant. (c) (c) (c) A A A letter of the society dated 24th June, letter of the society dated 24th June, letter of the society dated 24th June, 3 1995 1995 1995 addressed to the Senior Manager of the addressed to the Senior Manager of the addressed to the Senior Manager of the Intervener Intervener Intervener Bank notes lien of the bank in Bank notes lien of the bank in Bank notes lien of the bank in respect respect respect of of of the said unit. It specifies that the said unit. It specifies that the said unit. It specifies that the the the unit would not be transferred without unit would not be transferred without unit would not be transferred without the the the written written written consent of the bank. consent of the bank. consent of the bank. (d) (d) (d) The certificate dated 9th October, 1996 The certificate dated 9th October, 1996 The certificate dated 9th October, 1996 isisis issued by the joint Secretary of the issued by the joint Secretary of the issued by the joint Secretary of the society society society certifying certifying certifying that the defendant is the that the defendant is the that the defendant is the owner owner owner of the said unit from 1978 and in of the said unit from 1978 and in of the said unit from 1978 and in lawful lawful lawful possession as such owner untill date possession as such owner untill date possession as such owner untill date of of of the the the certificate. certificate. certificate. 2.2.2. It can be seen that the agreement is on a stamp It can be seen that the agreement is on a stamp It can be seen that the agreement is on a stamp paper paper paper as required at the time of its execution. as required at the time of its execution. as required at the time of its execution. The The The transfer of the share certificate in the name transfer of the share certificate in the name transfer of the share certificate in the name of of of the the the defendant is made on 19th August, 1979. The defendant is made on 19th August, 1979. The defendant is made on 19th August, 1979. The defendant defendant defendant as the owner has created a mortgage in as the owner has created a mortgage in as the owner has created a mortgage in favour favour favour of the Intervener Bank by deposit of such of the Intervener Bank by deposit of such of the Intervener Bank by deposit of such title title title deeds. deeds. deeds. 3.3.3. The plaintiff obtained an Arbitration Award of The plaintiff obtained an Arbitration Award of The plaintiff obtained an Arbitration Award of 28th 28th 28th May, 2001 which the plaintiff sought to May, 2001 which the plaintiff sought to May, 2001 which the plaintiff sought to execute execute execute by warrant of attachment attaching the by warrant of attachment attaching the by warrant of attachment attaching the movable movable movable and immovable properties of the defendant and immovable properties of the defendant and immovable properties of the defendant on on on 26th March, 2002. The plaintiff and his sister 26th March, 2002. The plaintiff and his sister 26th March, 2002. The plaintiff and his sister concern concern concern in which the plaintiff’s wife is the in which the plaintiff’s wife is the in which the plaintiff’s wife is the 4 proprietress proprietress proprietress got issued in all 6 warrants of got issued in all 6 warrants of got issued in all 6 warrants of attachment attachment attachment for for for movable properties and 6 warrants of movable properties and 6 warrants of movable properties and 6 warrants of attachment attachment attachment for immovable properties of the for immovable properties of the for immovable properties of the defendant. defendant. defendant. Thereafter, the warrants of sale came Thereafter, the warrants of sale came Thereafter, the warrants of sale came toto to be issued on 23rd January, 2003 and public be issued on 23rd January, 2003 and public be issued on 23rd January, 2003 and public notices notices notices thereupon came to be issued on 15th thereupon came to be issued on 15th thereupon came to be issued on 15th February February February 2003 and 17th February 2003 in two 2003 and 17th February 2003 in two 2003 and 17th February 2003 in two newspapers. newspapers. newspapers. 4.4.4. The applicant/Intervener seeks to raise the The applicant/Intervener seeks to raise the The applicant/Intervener seeks to raise the attachment attachment attachment only only only on immovable property which is unit on immovable property which is unit on immovable property which is unit no.301C no.301C no.301C at the aforesaid address. The Intervener at the aforesaid address. The Intervener at the aforesaid address. The Intervener claims claims claims to be a secured creditor and claims priority to be a secured creditor and claims priority to be a secured creditor and claims priority inin in repayment of the debt by the defendant. repayment of the debt by the defendant. repayment of the debt by the defendant. 5.5.5. The Intervener has obtained a decree passed by The Intervener has obtained a decree passed by The Intervener has obtained a decree passed by D.R.T. D.R.T. D.R.T. II in Misc.Application No.53 of 2002 and II in Misc.Application No.53 of 2002 and II in Misc.Application No.53 of 2002 and obtained obtained obtained Recovery Certificate No.243 of 2002 in Recovery Certificate No.243 of 2002 in Recovery Certificate No.243 of 2002 in Appeal Appeal Appeal No.117 of 2004. The plaintiff claims to No.117 of 2004. The plaintiff claims to No.117 of 2004. The plaintiff claims to have have have challenged the decree in appeal. The challenged the decree in appeal. The challenged the decree in appeal. The plaintiff plaintiff plaintiff has failed to obtain any order for stay has failed to obtain any order for stay has failed to obtain any order for stay of of of the execution of the Recovery Certificate. the execution of the Recovery Certificate. the execution of the Recovery Certificate. Consequently, Consequently, Consequently, even the DRAT has considered and not even the DRAT has considered and not even the DRAT has considered and not negatived negatived negatived the Intervener’s claim of priority as a the Intervener’s claim of priority as a the Intervener’s claim of priority as a secured secured secured creditor. creditor. creditor. 6.6.6. It will first have to be seen as to who is a It will first have to be seen as to who is a It will first have to be seen as to who is a 5 secured secured secured creditor and what are his specific creditor and what are his specific creditor and what are his specific priorities priorities priorities in law. The Law Lexicon by P.Ramanatha in law. The Law Lexicon by P.Ramanatha in law. The Law Lexicon by P.Ramanathan Aiyar Aiyar Aiyar (2nd) Edition 1997 at page 1738 describes a (2nd) Edition 1997 at page 1738 describes a (2nd) Edition 1997 at page 1738 describes a secured secured secured creditor as " a creditor holding security, creditor as " a creditor holding security, creditor as " a creditor holding security, the the the realisation of which would satisfy his claim." realisation of which would satisfy his claim." realisation of which would satisfy his claim." Hence, Hence, Hence, a secured creditor is one who has security a secured creditor is one who has security a secured creditor is one who has security for for for his debt. If further shows a secured creditor his debt. If further shows a secured creditor his debt. If further shows a secured creditor toto to be a person holding a mortgage, charge or lien be a person holding a mortgage, charge or lien be a person holding a mortgage, charge or lien on on on the property of the debtor as security of the the property of the debtor as security of the the property of the debtor as security of the debt debt debt due to him from the debtor. due to him from the debtor. due to him from the debtor. 7.7.7. The Intervener contends that he holds a The Intervener contends that he holds a The Intervener contends that he holds a mortgage mortgage mortgage by deposit of title deeds to secure his by deposit of title deeds to secure his by deposit of title deeds to secure his claim claim claim against the defendant. against the defendant. against the defendant. 8.8.8. The plaintiff has challenged the mortgage The plaintiff has challenged the mortgage The plaintiff has challenged the mortgage created created created by the defendant in favour of the by the defendant in favour of the by the defendant in favour of the applicant/Intervener. applicant/Intervener. applicant/Intervener. 9.9.9. It is therefore, to be seen whether the It is therefore, to be seen whether the It is therefore, to be seen whether the mortgage mortgage mortgage by by by deposit of title deeds is legal. It is deposit of title deeds is legal. It is deposit of title deeds is legal. It is the the the plaintiff’s case that it is not because the plaintiff’s case that it is not because the plaintiff’s case that it is not because the mortgage mortgage mortgage is not registered and not an attested is not registered and not an attested is not registered and not an attested document. document. document. It will therefore have to be seen It will therefore have to be seen It will therefore have to be seen whether whether whether the mortgage by deposit of title deeds the mortgage by deposit of title deeds the mortgage by deposit of title deeds requires requires requires registration to be valid document in law. registration to be valid document in law. registration to be valid document in law. 6 10. 10. 10. It has been held by the Privy Council in the It has been held by the Privy Council in the It has been held by the Privy Council in the case case case of of of Sundarachariar vs Narayana Ayyar AIR 1931 PC 36 that that that when mortgage was by an act of deposit when mortgage was by an act of deposit when mortgage was by an act of deposit and and and payment of money showing only a written record payment of money showing only a written record payment of money showing only a written record of of of the particulars of the deeds by which they were the particulars of the deeds by which they were the particulars of the deeds by which they were deposited, deposited, deposited, it did not require registration. In it did not require registration. In it did not require registration. In that that that case, a memorandum was only a written record case, a memorandum was only a written record case, a memorandum was only a written record of of of the particulars of the deeds which was the the particulars of the deeds which was the the particulars of the deeds which was the subject subject subject of an agreement constituted merely by an of an agreement constituted merely by an of an agreement constituted merely by an act act act of deposit and payment of money. It was merely of deposit and payment of money. It was merely of deposit and payment of money. It was merely a list of documents deposited with the mortgagee list of documents deposited with the mortgagee list of documents deposited with the mortgagee and and and nothing more. It did not embody the terms of nothing more. It did not embody the terms of nothing more. It did not embody the terms of the the the agreement between the parties and therefore, agreement between the parties and therefore, agreement between the parties and therefore, did did did not require registration. Even in this case, not require registration. Even in this case, not require registration. Even in this case, there there there was was was no written agreement between the parties, no written agreement between the parties, no written agreement between the parties, the the the defendant and Intervener/applicant. All that defendant and Intervener/applicant. All that defendant and Intervener/applicant. All that has has has been done between the defendant and the been done between the defendant and the been done between the defendant and the Intervener Intervener Intervener is that the defendant has deposited the is that the defendant has deposited the is that the defendant has deposited the aforesaid aforesaid aforesaid documents as his documents of title or documents as his documents of title or documents as his documents of title or title title title deeds with the General Manager of the deeds with the General Manager of the deeds with the General Manager of the Intervener Intervener Intervener bank. A memorandum showing merely the bank. A memorandum showing merely the bank. A memorandum showing merely the deposit deposit deposit made by the defendant with the Intervener made by the defendant with the Intervener made by the defendant with the Intervener isisis recorded. To the memorandum are attached the recorded. To the memorandum are attached the recorded. To the memorandum are attached the aforesaid aforesaid aforesaid documents. documents. documents. The memorandum is, therefore, The memorandum is, therefore, The memorandum is, therefore, only only only a written record of the particulars of the a written record of the particulars of the a written record of the particulars of the documents documents documents merely by an act of deposit of title merely by an act of deposit of title merely by an act of deposit of title deeds deeds deeds by the defendant and payment of money by the by the defendant and payment of money by the by the defendant and payment of money by the 7 applicant/Intervener applicant/Intervener applicant/Intervener bank. The memorandum, bank. The memorandum, bank. The memorandum, therefore, therefore, therefore, neither neither neither purported nor operated to create purported nor operated to create purported nor operated to create the the the any right, title or interest in the property any right, title or interest in the property any right, title or interest in the property included included included in the documents. It was merely by the in the documents. It was merely by the in the documents. It was merely by the deposit deposit deposit of of of title deeds. Hence, the mortgage merely title deeds. Hence, the mortgage merely title deeds. Hence, the mortgage merely by by by deposit of title deeds cannot and will not deposit of title deeds cannot and will not deposit of title deeds cannot and will not require require require registration. registration. registration. 11. 11. 11. Further, in the case of Further, in the case of Further, in the case of Sir Hari Shankar Paul vs Kedar Nath Saha AIR 1939 PC 167 ititit has been held has been held has been held that that that though a mortgage is to be effected by a though a mortgage is to be effected by a though a mortgage is to be effected by a registered registered registered instrument instrument instrument duly signed and attested, the duly signed and attested, the duly signed and attested, the mortgage mortgage mortgage by deposit of title deeds is expressly by deposit of title deeds is expressly by deposit of title deeds is expressly recognised recognised recognised and saved because of the convenience of and saved because of the convenience of and saved because of the convenience of this this this form of security and hence when merely the form of security and hence when merely the form of security and hence when merely the title title title deeds are deposited, no registration is deeds are deposited, no registration is deeds are deposited, no registration is required required required even if it is accompanied by a collateral even if it is accompanied by a collateral even if it is accompanied by a collateral written written written agreement, unless the parties agreement, unless the parties agreement, unless the parties contemporaneously contemporaneously contemporaneously entered into a contractual entered into a contractual entered into a contractual writing writing writing which evidences the deposit and contains which evidences the deposit and contains which evidences the deposit and contains the the the essentials of the transaction expressed essentials of the transaction expressed essentials of the transaction expressed conferring conferring conferring a power of sale on the mortgagee and a power of sale on the mortgagee and a power of sale on the mortgagee and create create created an interest in the property in favour of an interest in the property in favour of an interest in the property in favour of the the the mortgagee. In this case, the memorandum shows mortgagee. In this case, the memorandum shows mortgagee. In this case, the memorandum shows that that that the title deeds are deposited and refers them the title deeds are deposited and refers them the title deeds are deposited and refers them inin in the schedule. It does not require registration the schedule. It does not require registration the schedule. It does not require registration as as as it is only a mortgage by deposit of title deeds it is only a mortgage by deposit of title deeds it is only a mortgage by deposit of title deeds 8 and and and accordingly makes the applicant/Intervener a accordingly makes the applicant/Intervener a accordingly makes the applicant/Intervener a secured secured secured creditor of the defendant for the property creditor of the defendant for the property creditor of the defendant for the property of of of which title deeds are deposited being aforesaid which title deeds are deposited being aforesaid which title deeds are deposited being aforesaid unit unit unit No.301 C. No.301 C. No.301 C. 12. 12. 12. Accordingly, the attachment on unit No.301 C Accordingly, the attachment on unit No.301 C Accordingly, the attachment on unit No.301 C atatat the aforesaid address is raised. the aforesaid address is raised. the aforesaid address is raised. 13. 13. 13. This order is stayed for two weeks. This order is