Case: United Bank of India Ltd Vs. M/s. Lekharam Sonaram &amp; Co. &amp; Others

I apprehend that that general rule will not apply when you have a deposit accompanied by an actual written charge. In that case you must refer to the terms of the written document and any implication that might be raised, supposing there was no document, is put out of the and reduced to silence by the documents by which alone you must be governed. In Sundarachariar v. Narayan Ayyar, 58 Ind App 68 : (AIR 1931 PC 36 ), the plaintiff had verbally agreed at Madras to make a further advance to the defendants, making Rs. 60,000 in all upon the deposit of certain documents of title. The defendants agent signed and handed to the plaintiff a memorandum stating As agreed upon in person I have delivered to you the undermentioned documents as security - a list of the documents following, also a promissory note for Rs. 60,000. After examination of the documents the agreed amount was handed over to the plaintiff. It was held by the Judicial Committee that the memorandum was not a document which required registration, even if the agreed advance was conditional upon it being given; and that, there being no written agreement, the memorandum as well as oral evidence, was admissible in evidence to prove the intent to create a security by deposit of the documents named. The same view was expressed by this Court in Rachpal Mahraj v. Bhagwandas, 1950 SCR 548 : (AIR.1950 SC 272) , in which it was pointed out that the question whether a memorandum of deposit of title deeds is compulsorily registrable under S.17 of the Indian Registration Act, 1908 depends on whether the parties intended to reduce their bargain regarding the deposit to the form of a document. If so, the document required 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, there being no express bargain, the document being merely evidential did not require registration. In that case, accounts were taken relating to the appellants dealings with the respondents on a certain date and the appellant gave certain title deeds to the respondents for being held as security for the amounts then found due and which may become due, and on the same day the appellant gave a memorandum to the respondents in the form of a letter addressed to the respondents which stated as follows : 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..... It was held by this Court that the parties did not intend to create a charge by the execution of the document, but merely 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. 8. Applying the principle to the present case, we consider that the letter at Ex. 7(a) was not meant to be an integral part of the transaction between the parties. The letter does not mention what was the principal amount borrowed or to be borrowed. Neither does it refer to rate of interest for the loan. It is important to notice that the letter does not mention details of title deeds which are to be deposited with the plaintiff-bank. We are, therefore, of the opinion that the view of the High Court with regard to the construction of Ex. 7(a) is erroneous and the document was not intended to be an integral part of the transaction and did not, by itself, operate to create an interest in the immovable property. It follows, therefore, that the document- Ex. 7 (a) - did not require registration under S. 17 of the Indian Registration Act. 9. On behalf of the respondents it was argued in the alternative that Exs. 7 (b) and 12 were integral parts of the transaction and would require registration. We are unable to accept this argument as correct. As the High Court has pointed out, the letter written by Sonaram Ex. 7 (b) - is not of much consequence, for it does not contain the material particulars of the loan and does not mention details of title deeds intended to be deposited with the plaintiff-bank. On the other hand, the letter - Ex. 7(b)suggests that the transaction was not finally completed as Babulal Ram-Defendant No.4 - was authorised in the letter to negotiate further in this respect. As regards Ex.12 also, it is not possible to accept the argument of the respondents that it created a charge for the reason that the language in Ex. 12 suggests that it recorded a transaction which had already been concluded and under which rights and liabilities had already been concluded and under which rights and liabilities had already been agreed upon. It is also significant that Ex. 12 is written not by Lekharam -the Karta of the joint family-but by Babulal Ram. It recites that he had deposited the title deeds with an intent to create an equitable mortgage upon all my rights, title and interest in the said properties. The language of Ex. 12 is identical in material respects with the language of the document construed by this Court in 1950 SCR 548 : (AIR 1950 SC 272 ), and is covered by the decision in that case. We accordingly reject the argument addressed by the learned Counsel for the respondents on this aspect of the case.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]8. Applying the principle to the present case, we consider that the letter at Ex. 7(a) was not meant to be an integral part of the transaction between the parties. The letter does not mention what was the principal amount borrowed or to be borrowed. Neither does it refer to rate of interest for the loan. It is important to notice that the letter does not mention details of title deeds which are to be deposited with the. We are, therefore, of the opinion that the view of the High Court with regard to the construction of Ex. 7(a) is erroneous and the document was not intended to be an integral part of the transaction and did not, by itself, operate to create an interest in the immovable property. It follows, therefore, that the documentdid not require registration under S. 17 of the Indian Registration ActWe are unable to accept this argument as correct. As the High Court has pointed out, the letter written by Sonaram Ex. 7 (b)is not of much consequence, for it does not contain the material particulars of the loan and does not mention details of title deeds intended to be deposited with the. On the other hand, the letterEx. 7(b)suggests that the transaction was not finally completed as Babulalwas authorised in the letter to negotiate further in this respect. As regards Ex.12 also, it is not possible to accept the argument of the respondents that it created a charge for the reason that the language in Ex. 12 suggests that it recorded a transaction which had already been concluded and under which rights and liabilities had already been concluded and under which rights and liabilities had already been agreed upon. It is also significant that Ex. 12 is written not by Lekharamthe Karta of the jointt by Babulal Ram. It recites that he had deposited the title deeds with an intent to create an equitable mortgage upon all my rights, title and interest in the said properties. The language of Ex. 12 is identical in material respects with the language of the document construed by this Court in 1950 SCR 548 : (AIR 1950 SC 272  ), and is covered by the decision in that case. We accordingly reject the argument addressed by the learned Counsel for the respondents on this aspect of the case