A.B. GOVARDHAN versus P. RAGOTHAMAN
[2024] 8 S.C.R. 1002, Supreme Court of India, 2024
Outcome: Appeal(s) allowed (Granted)
Segment: Issues
[2024] 8 S.C.R. 1002 : 2024 INSC 640
A.B. Govardhan 
v. 
P. Ragothaman
(Civil Appeal No(s). 9975-9976 of 2024)
29 August 2024
[Hima Kohli and Ahsanuddin Amanullah,* JJ.]
Issue for Consideration
Whether the respondent-defendant by way of the agreement agreed 
to create equitable mortgage by depositing the title deeds for the 
loan obtained by him from the appellant-plaintiff; whether there 
was redemption of the mortgage; whether the Single Judge rightly 
held the agreement to be a mortgage in view of Section 58(f) of 
the Transfer of Property Act, 1882.
Headnotes†
Transfer of Property Act, 1882 – s.58 – Mortgage – Loan 
obtained by the respondent-defendant from the appellant-
plaintiff – Under the agreement in question, the respondent 
produced title document of his property as security towards 
debt and agreed to register the Sale Deed as and when 
demanded – However, later neither the respondent executed 
the Sale Deed nor paid the balance sum – Agreement, if was a 
mortgage – Whether the respondent by way of the agreement 
created a equitable mortgage by deposit of title deeds:
Held: Yes – There was no redemption of this mortgage – Division 
Bench erred in holding that the plaint averments did not conclude 
that there was a valid mortgage entitling the appellant-plaintiff 
to sue for a mortgage decree – Single Judge correctly held the 
agreement to be a mortgage in view of s.58(f) of the 1882 Act – 
Respondent admitted execution of the agreement (Exhibit P-1) 
however,
claimed coercion but led no evidence to support this 
plea – Further, the agreement only recorded what had happened 
and did not create/extinguish rights/liabilities and therefore covered 
by para 14.3 of Narvir Singh and did not require registration – 
Impugned orders set aside – Judgment of the Single Judge 
restored with modification. [Paras 22, 29, 33]
Pleadings – Evidence – Every fact pleaded has to be 
substantiated: 
* Author
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A.B. Govardhan v. P. Ragothaman 
Held: For every pleaded fact, there has to be evidence, oral or 
documentary, to substantiate the same – A bald averment or 
mere statement by a defendant bereft of evidentiary material to 
back up such averment/statement takes such defendant’s case 
nowhere. [Para 24]
Delay – Condonation – Liberal approach – Discussed.
Case Law Cited
State of Haryana v Narvir Singh [2013] 9 SCR 949 : (2014) 1 
SCC 105 – relied on.
Kalyan Kumar Gogoi v Ashutosh Agnihotri [2011] 1 SCR 796 : 
(2011) 2 SCC 532; Syndicate Bank v Estate Officer & Manager, 
APIIC Ltd. [2007] 9 SCR 619 : (2007) 8 SCC 361; Syndicate 
Bank v Estate Officer and Manager (Recoveries), Andhra 
Pradesh Industrial Infrastructure Corporation Limited (2021) 3 
SCC 736; Collector, Land Acquisition, Anantnag v. Mst Katiji  
[1987] 2 SCR 387 : (1987) 2 SCC 107; Esha Bhattacharjee v. 
Managing Committee of Raghunathpur Nafar Academy [2013] 9 
SCR 782 : (2013) 12 SCC 649; N L Abhyankar v Union of India 
(1995) 1 MhLJ 503; M/s Dehri Rohtas Light Railway Company 
Limited v District Board, Bhojpur [1992] 2 SCR 155 : (1992) 2 SCC 
598; Municipal Council, Ahmednagar v Shah Hyder Beig [1999] 
Supp. 5 SCR 197 : (2000) 2 SCC 48; Mool Chandra v Union of 
India, 2024 SCC OnLine SC 1878 – referred to.
List of Acts
Transfer of Property Act, 1882.
List of Keywords
Mortgage; Mortgage deed; Equitable mortgage by depositing title 
deeds; Loan; Redemption of the mortgage; Mortgage decree;
Promissory notes; Registration; Delay condonation; Liberal 
approach; Pleadings; Evidence.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 9975-9976 of 
2024
From the Judgment and Order dated 12.07.2018 and 22.02.2017 of 
the High Court of Judicature at Madras in CMP No. 10107 of 2017 
and OSA No. 189 of 2011 respectively
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Appearances for Parties
Narendra Kumar, V. Balaji, Atul Sharma, Asaithambi MSM, R. Mohan, 
A. Krishna Kumar, C. Kannan, Rakesh K. Sharma, Advs. for the 
Appellant.
V Prabhakar, Sr. Adv., S. Rajappa, Ms. Jyoti Singh, R Gowrishankar, 
N J Ramchandar, Ms. Jyoti Parasher, Rakesh Ranjan, Advs. for the 
Respondent.
Judgment / Order of the Supreme Court
Judgment
Ahsanuddin Amanullah, J.
Heard Mr. Narendra Kumar, learned counsel for the appellant and 
Mr. V. Prabhakar, learned Senior counsel for the respondent. 
2.	
Leave granted. The pending applications shall be dealt with in the 
final pages of this judgment.
3.	
The present appeals germinate from the: 
3.1.	 Final Judgment and Order dated 22.02.2017 (hereinafter referred 
to as the “First Impugned Order”)1 passed by a Division Bench 
of the High Court of Judicature at Madras (hereinafter referred 
to as the “High Court”) in Original Side Appeal2 No.189 of 2011, 
whereby the appeal filed by the respondent was allowed and 
Judgment dated 01.04.2010 passed by a Single Judge of the 
High Court in Civil Suit No.701 of 2005 (hereinafter referred to 
as the “suit”) was set aside.
3.2.	 Order dated 12.07.2018 (hereinafter referred to as the “Second 
Impugned Order”) passed by the same Division Bench, whereby 
Civil Miscellaneous Petition3 No.10107 of 2017 in OSA No.189 
of 2011 filed by the appellant seeking to “set aside” the First 
Impugned Order and restore the main appeal for fresh
hearing, 
was dismissed.
1	
2017 SCC OnLine Mad 11918 | (2017) 3 CTC 777 | (2017) 3 Mad LJ 522 | (2017) 4 LW 421.
2	
Hereinafter abbreviated to “OSA”.
3	
Hereinafter abbreviated to “CMP”.
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A.B. Govardhan v. P. Ragothaman 
BRIEF FACTS:
4.	
The respondent (defendant in the suit) and his wife are engaged in 
business of building materials. As per the appellant (plaintiff in the 
suit), the respondent approached him in February, 1995 seeking a 
loan for his business. The appellant advanced a loan of Rs.10,00,000/- 
(Rupees Ten Lakhs) to the respondent on the security of his properties.
5.	
Since the respondent could not pay Stamp Duty on the Mortgage 
Deed, it was agreed between the parties that the said sum be split 
into two registered mortgages and the balance in four promissory 
notes. Accordingly, the respondent executed the following:
i)	
Mortgage Deed dated 16.03.1995 for Rs.1,00,000/- (Rupees 
One Lakh) agreeing to repay the same together with interest 
at 36% per annum;4
ii)	
Mortgage Deed dated 17.04.1995 for Rs.50,000/- (Rupees Fifty 
Thousand) agreeing to repay the same together with interest 
at 36% p.a., and;
iii)	
Four promissory notes for the balance amount of Rs.8,50,000/- 
(Rupees Eight Lakhs Fifty Thousand).
6.	
Besides the two mortgages supra, the respondent borrowed the 
remaining Rs.8,50,000/- (Rupees Eight Lakhs Fifty Thousand) in 
four promissory notes on different dates. Since there was default in 
payment of interest, the appellant demanded repayment of the amount 
due under the four promissory notes. The respondent thereupon, in 
various panchayats, promised to repay the amounts. Ultimately, in the 
panchayat dated
24.06.2000, the respondent produced title document 
of his property as security towards debt under the four promissory 
notes, which has been noted in the Agreement dated 24.06.2000 
(hereinafter referred to as the “Agreement”). This Agreement, in 
essence, is the root of the instant lis. 
7.	
The Agreement notes that the respondent owed a total amount 
of Rs.11,00,000/- (Rupees Eleven Lakhs) to the appellant and in 
settlement thereof, the respondent handed over the title deeds 
pertaining to the property situated at No.33, Avvai Thirunagar, 
Chennai-600111, admeasuring 1300 square feet of land together with 
4	
Hereinafter abbreviated to “p.a.”.
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700 square feet building (hereinafter referred to as the “schedule 
property”), which was valued at Rs.9,00,000/- (Rupees Nine Lakhs). 
Per the Agreement, the respondent agreed to register the Sale 
Deed as and when demanded. Further, for re-paying the balance 
sum of Rs.2,00,000/- (Rupees Two Lakhs), it was agreed that the 
respondent will redeem the mortgaged property from the appellant 
and re-mortgage it elsewhere.
8.	
After the Agreement was entered into between the parties, the 
promissory notes were returned which were torn-out in the panchayat. 
Thereafter, the respondent neither executed a Sale Deed nor paid 
the balance sum of Rs.2,00,000/- (Rupees Two Lakhs). As a result, 
the appellant-plaintiff, filed the suit before the High Court, praying for:
“(I) granting a usual preliminary mortgage decree of the 
Schedule mentioned property against the defendant for 
the recovery of Rs.23,96,000/- together with interest 
at 36% p.a. on Rs.11,00,000/- till the date of realization;
And pass a final decree thereafter for sale of the Mortgaged 
property;
(II) for costs of this suit; and for such other equitable reliefs 
as may deem fit and proper in the circumstances of the 
case and render justice.”
(sic)
9.	
The Single Judge, after perusing the evidence on record and hearing 
the parties, passed judgment dated 01.04.2010 holding that the 
respondent-defendant had agreed to “create equitable mortgage by 
depositing the title
deeds”. Finding thus, the Single Judge decreed 
the suit. Aggrieved, the respondent filed an intra-court appeal being 
OSA No.189 of 2011 along with Miscellaneous Petition5 No.1 of 2011, 
which was an application seeking condonation of delay of 176 days. 
The appellant through his advocate, Mr. V. Manohar received notice 
and filed a counter-affidavit opposing the said condonation of delay 
application. On 18.04.2011, the Division Bench was pleased to 
condone the delay, subject to payment of cost of Rs.1,000/- (Rupees 
One Thousand) to the appellant.
5	
Hereinafter abbreviated to “MP”.
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A.B. Govardhan v. P. Ragothaman 
10.	 The Division Bench vide the First Impugned Order allowed the 
appeal, holding that the appellant had failed to prove that there was 
a mortgage executed by the respondent. It is to be noted that none 
appeared for the appellant in the appeal. Subsequently, the appellant 
filed CMP No.10107 of 2017 in OSA No.189 of 2011, praying therein 
to “set aside” the First Impugned Order and for restoration of the main 
appeal for fresh hearing. The appellant contended that his erstwhile 
counsel (Mr. V. Manohar) was authorized only to appear in the MP 
filed to condone the delay [MP No.1 of 2011] and that there was 
no notice issued to him after registering of the appeal. The Division 
Bench vide the Second Impugned Order dismissed the CMP.
SUBMISSIONS BY THE APPELLANT-PLAINTIFF:
11.	 At the outset, the learned counsel for the appellant submitted that 
the Division Bench of the High Court gravely erred in holding that the 
plaint averments were not sufficient to conclude that there was a valid 
mortgage entitling him to sue for a mortgage decree. It was submitted 
that the plaint, read as a whole, alongwith the Agreement, the Proof 
Affidavits and evidence of PW-1/appellant and DW1/respondent 
clearly evince the fact that a loan was secured by the respondent 
by mortgaging the schedule property. The amount in the Agreement 
pertains to loan transactions for which the mortgage was created by 
the Respondent. It was submitted
that in such circumstances, the 
findings in the First Impugned Order are highly erroneous.
12.	 It was submitted by learned counsel that the Single Judge has 
rightly arrived at the conclusion that the present case is one where 
the respondent agreed to create a mortgage by depositing the title 
deed. There was an actionable debt and the respondent had fully 
intended that the deed ought to be the security for the debt. The 
Single Judge had also noted that the respondent in his evidence as 
DW1, had agreed to deposit the title deed to create an “equitable 
mortgage” for the loan amount obtained by him from the appellant. 
Thus, the Single Judge had rightly decreed the appellant’s suit and 
passed preliminary decree of mortgage.
13.	 It was further submitted that the Division Bench in the First Impugned 
Order had erred in holding that there was no stipulation to pay 
interest in the Agreement and that therefore the rate of interest as 
granted by the Single Judge could not have been so granted. It was 
submitted that various loans were advanced by the appellant to the
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respondent categorically stipulating interest at the rate of 36% p.a. 
on repayment. Once this contractual rate of interest was agreed upon 
by the parties, there was no scope for the Division Bench to state 
that there was no stipulation to pay interest in the Agreement. The 
Agreement had to be read in conjunction with various promissory 
notes and documents evidencing the mortgage and repayment of 
the loan with interest. Learned counsel contended that the Division 
Bench erred in holding that there was no prayer for grant of a 
personal decree against the respondent. It was submitted that the 
prayer clause of the plaint would show to the contrary. 
14.	 On the Second Impugned Order, learned counsel for the appellant 
submitted that the Division Bench went wrong in not appreciating 
that the appellant had never authorized his counsel to represent 
him in the OSA and his vakalatnama was confined to the MP filed 
by the respondent seeking condonation of delay of 176 days. The 
MP was allowed by the Division Bench vide order dated 18.04.2011. 
Thereafter, the appellant, claims learned counsel, was not served with 
any notice in the OSA. The appellant submits that he was neither 
informed by his counsel, Mr. V. Manohar or by the Registry of the 
High Court about the status of the appeal.
15.	 It was further submitted that the Division Bench gravely erred in 
holding that the vakalatnama was given to Mr. V. Manohar for
appearing in the MP for condonation of delay, the main appeal as 
also this Court. It was submitted that Mr. V. Manohar, counsel, was 
practicing only in the High Court. There was no question of the 
appellant authorizing any counsel for taking up the case in this Court 
as and when a case would come up. It was urged that a blanket 
printed statement on a vakalatnama can never constitute the intention 
of a litigant authorizing his/her/their counsel to represent the litigant 
in question in all courts and all proceedings.
16.	 Learned counsel contended that the appellant’s advocate Mr. 
Sukumar, who was appearing for the appellant in the Court at 
Tiruvannamalai, called the appellant and informed him that a judgment 
showing the appellant’s name was published in one of the law reports 
under the citation 2017 (3) MLJ 521 and it also showed that he went 
unrepresented therein. The appellant categorically submits that it 
was only then that the appellant came to know that the OSA arising 
from the suit had been decided against him ex-parte. Prayer was 
made to allow the appeals.
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A.B. Govardhan v. P. Ragothaman 
SUBMISSIONS BY THE RESPONDENT-DEFENDANT: 
17.	 Per contra, learned senior counsel for the respondent submitted that 
there is no merit in the present appeals and the impugned orders 
do not call for any interference by this Court under Article 136 of the 
Constitution of India (hereinafter referred to as the “Constitution”). It 
was submitted that the Agreement does not refer to any mortgage 
having been created, since the recitals therein make it clear that 
the Agreement was to sell the schedule property to the appellant, 
and for the said purpose alone, the title deed of the property was 
handed over to the appellant. It was submitted that when the very 
genesis of the suit is the Agreement and the Agreement per se does 
not disclose the creation of any mortgage, a suit for foreclosure 
cannot be maintained and the Division Bench had rightly held so. 
The findings in the First Impugned Order that no mortgage has been 
created, stands justified in view of the contents of the Agreement.
18.	 Next, it was advanced that the plaint claims that Rs.23,96,000/- 
(Rupees Twenty Three Lakhs Ninety Six Thousand) was due as 
per the Agreement by including interest @ 36% p.a. till the date of 
institution of the suit. It was submitted that no particulars have been 
set forth in the plaint as to how this amount of Rs.23,96,000/- (Rupees 
Twenty Three Lakhs Ninety Six Thousand) was arrived at. While 
the cause of action pleaded in
the suit makes reference only to the 
Agreement, the appellant makes a claim in respect of the mortgages 
dated 16.03.1995 and 17.04.1995, while also reserving the right to 
take separate action. Thus, it was submitted that the appellant has 
not put forth any specific case but has attempted to intermingle 
the mortgages and/or promissory notes with the Agreement. It was 
submitted that the mortgages dated 16.03.1995 and 17.04.1995 as 
also the promissory notes have been merged to arrive at the figure 
of Rs.11,00,000/- (Rupees Eleven Lakhs), which is being claimed as 
due from the respondent. It was further submitted that the promissory 
notes have not been exhibited in the suit.
19.	 Learned Senior counsel also pointed out that in respect of the 
two mortgages dated 16.03.1995 and 17.04.1995, the High Court 
in Second Appeal6 No.1235 of 2014 (which emanated from a suit 
for redemption filed by the respondent) passed an interim order 
6	
Hereinafter abbreviated to “SA”.
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dated 25.08.2022, directing the respondent to pay the appellant 
a sum of Rs.10,00,000/- (Rupees Ten Lakhs), being the principal 
and interest on both the mortgages. Subsequently, the High Court, 
by way of its final order dated 24.01.2023 in the said SA, noted 
the payments made by the respondent to the appellant, the return 
of the original Mortgage Deeds and also the cancellation of the 
mortgages. Thus, as the decree in the redemption suit had been 
complied with, it dismissed the second appeal as having become 
infructuous. Payment had been made and, after receiving the same, 
the appellant had returned the original title deeds to the respondent 
in respect of the property which was the subject-matter of the two 
mortgages dated 16.03.1995 and 17.04.1995.
20.	 It was further submitted that in the criminal case filed by the 
appellant against the respondent under Section 138 of the Negotiable 
Instruments Act, 1881, this Court dismissed Special Leave Petition 
(Criminal) No.994 of 2019,7 confirming the acquittal of the respondent. 
As regards the Second Impugned Order, it was submitted that the 
facts recorded therein speak for themselves and the appellant did not 
deserve any indulgence. Based on the above pleas, the respondent 
has sought dismissal of the instant appeals.
ANALYSIS, REASONING & CONCLUSION:
21.	 Having given our anxious thought to the lis, we find that the Orders 
impugned need interference.
22.	 In our
view, the Single Judge had appreciated the bundle of facts in 
the correct perspective, that is, the respondent had, by way of the 
Agreement, created a mortgage by deposit of title deeds. There was 
no redemption of this mortgage. The Division Bench fell in error in 
concluding that “The plaint averments are self-contradictory, vague 
and does not make out a clear case of mortgage.” (sic). Moreover, the 
plea of the respondent that the mortgage was redeemed is factually 
7	
Order dated 28.08.2023 reads as below:
“Heard learned counsel for the petitioner.
After having perused the evidence of the petitioner- complainant, we are satisfied that the acquittal of the 
respondent is a possible conclusion, which could have been recorded by the High Court.
Though, something can be said about the manner in which the findings have been recorded by the 
High Court, we are recording our findings after having perused the evidence of the complainant. Hence, 
we concur with the ultimate order of the High Court and accordingly, the special leave petition stands 
dismissed. 
Pending application(s), if any, shall stand disposed of.”
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A.B. Govardhan v. P. Ragothaman 
incorrect. Another point not noted by the Division Bench is that the 
mortgage which took care of the return of Rs.8,50,000/- (Rupees 
Eight Lakhs Fifty Thousand), was never redeemed and initially, only 
re the two previous mortgages, the principal amount of Rs.1,50,000/- 
(Rupees One Lakh Fifty Thousand) was returned, without the agreed 
interest. As noted above, subsequent to the passing of the Impugned 
Orders, in SA No.1235 of 2014, interim Order dated 25.08.2022 had 
directed the respondent to pay the appellant a sum of Rs.10,00,000/- 
(Rupees Ten Lakhs), being the principal and interest on both the 
mortgages. This stood complied with and the SA was dismissed as 
having become infructuous on 24.01.2023.
23.	 However, the Agreement envisaged property worth Rs.9,00,000/- 
(Rupees Nine Lakhs) out of the total claimed due of Rs. 11,00,000/- 
(Rupees Eleven Lakhs), being registered in favour of the appellant 
or his nominee. The Agreement also stipulated that after redeeming 
the earlier/previous mortgages, the respondent would re-mortgage for 
the purpose of raising Rs.2,00,000/- (Rupees Two Lakhs). Thereafter, 
the said sum of Rs.2,00,000/- (Rupees Two Lakhs) would be paid 
to the appellant. The said condition was not followed through i.e., 
no Sale Deed was executed and registered, nor was the sum of 
Rs.2,00,000/- (Rupees Two Lakhs) paid. We are of the view that in 
such a case, it was well-within the competence of
the appellant to 
move the Court, which he did by instituting the suit. 
24.	 Another factor is that the appellant was not heard in the appeal, 
as recorded in the First Impugned Order itself. Undoubtedly, in 
the face of non-appearance by the appellant before it, the Division 
Bench was free to proceed with final hearing of the appeal, as it did. 
However, what seems to have transpired is that in the absence of 
the appellant, what was averred by the respondent in the appeal was 
accepted as correct by the Division Bench. Fact remained that the 
respondent admitted to having executed Exhibit P-1 (the Agreement) 
and that the signature(s) thereon were his, in the Proof Affidavit 
dated  01.03.2010 as also cross-examination dated 08.03.2010. 
No doubt, he (respondent) has denied its voluntary execution and 
contended that it was under coercion and threat, but no evidence 
was brought or led by him to support this plea. The Division Bench 
opined, correctly, that “It is true that there was no supporting evidence 
adduced by him to show as to how he was threatened and forced to 
execute Ex.P1.” Pausing here, we may emphasise that for every fact
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which is pleaded, there has to be evidence, either oral or documentary, 
to substantiate the same. A bald averment or mere statement by a 
defendant bereft of evidentiary material to back up such averment/
statement takes such defendant’s case nowhere. While deciding a 
statutory appeal under Section 116A of the Representation of the 
People Act, 1951 against an order of the Gauhati High Court rejecting 
an Election Petition, this Court in Kalyan Kumar Gogoi v Ashutosh 
Agnihotri (2011) 2 SCC 532 commented that the term ‘evidence’ is 
used colloquially in different senses:
“33. The word “evidence” is used in common parlance in 
three different senses: (a) as equivalent to relevant, (b) as 
equivalent to proof, and (c) as equivalent to the material, 
on the basis of which courts come to a conclusion about 
the existence or non-existence of disputed facts. Though, 
in the definition of the word “evidence” given in Section 3 
of the Evidence Act one finds only oral and documentary 
evidence, this word is also used in phrases such as best 
evidence, circumstantial evidence, corroborative evidence, 
derivative evidence, direct evidence, documentary 
evidence, hearsay evidence, indirect evidence, oral 
evidence, original evidence, presumptive evidence, primary 
evidence, real evidence, secondary evidence, substantive 
evidence, testimonial evidence, etc.”
(emphasis supplied)
25.	 However, we see in the facts at hand that there is
no dispute qua 
execution of the Agreement. The respondent claims/pleads coercion 
etc. Arguendo, such was the case, what would assume relevance 
would be the steps taken immediately thereafter by the respondent. 
Admittedly, no steps whatsoever were taken, in law, by the respondent 
to resile from the Agreement or to revoke it for at least half a decade 
i.e., from the date of the Agreement till the suit came to be instituted. 
The respondent did not even lodge appropriate legal proceedings 
and hence, it does not lie in his mouth to take the plea that the 
Agreement was not signed voluntarily. If such coercion etc. had 
actually occurred, the respondent has no explanation to offer as to 
why he did not avail of any civil law remedy (to have the Agreement 
nullified or voided) or take recourse to criminal law (filing a complaint 
or registering a First Information Report). What seems clear to us
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is that the panchayat tried to resolve the dispute and that led to the 
Agreement between the parties.
26.	 It would be profitable to refer to some decisions, after looking at the 
relevant provisions of the Transfer of Property Act, 1882 (hereinafter 
referred to as the “Act”). Chapter IV of the Act is entitled “Of Mortgages 
Of Immovable Property And Charges” and the relevant Section is 
quoted below:
“58. “‘Mortgage’, ‘mortgagor’, ‘mortgagee’, ‘mortgage-
money’ and ‘mortgage-deed’” defined.—(a) A mortgage 
is the transfer of an interest in specific immoveable property 
for the purpose of securing the payment of money advanced 
or to be advanced by way of loan, an existing or future 
debt, or the performance of an engagement which may 
give rise to a pecuniary liability.
The transferor is called a mortgagor, the transferee a 
mortgagee; the principal money and interest of which 
payment is secured for the time being are called the 
mortgage-money, and the instrument (if any), by which 
the transfer is effected is called a mortgage-deed.
(b) Simple mortgage.—Where, without delivering possession 
of the mortgaged property, the mortgagor binds himself 
personally to pay the mortgage-money, and agrees, 
expressly or impliedly, that, in the event of his failing to 
pay according to his contract, the mortgagee shall have a 
right to cause the mortgaged property to be sold and the 
proceeds of sale to be applied, so far as
may be necessary, 
in payment of the mortgage-money, the transaction is called 
a simple mortgage and the mortgagee a simple mortgagee.
(c) Mortgage by conditional sale.—Where the mortgagor 
ostensibly sells the mortgaged property—
on condition that on default of payment of the mortgage-
money on a certain date the sale shall become absolute, or
on condition that on such payment being made the sale 
shall become void, or
on condition that on such payment being made the buyer 
shall transfer the property to the seller,
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the transaction is called a mortgage by conditional sale 
and the mortgagee a mortgagee by conditional sale:
Provided that no such transaction shall be deemed to 
be a mortgage, unless the condition is embodied in the 
document which effects or purports to effect the sale.
(d) Usufructuary mortgage.—Where the mortgagor 
delivers possession or expressly or by implication 
binds himself to deliver possession of the mortgaged 
property to the mortgagee, and authorises him to retain 
such possession until payment of the mortgage-money, 
and to receive the rents and profits accruing from the 
property or any part of such rents and profits and to 
appropriate the same in lieu of interest, or in payment of 
the mortgage-money, or partly in lieu of interest or partly 
in payment of the mortgage-money, the transaction is 
called an usufructuary mortgage and the mortgagee an 
usufructuary mortgagee.
(e) English mortgage.—Where the mortgagor binds 
himself to re-pay the mortgage-money on a certain date, 
and transfers the mortgaged property absolutely to the 
mortgagee, but subject to a proviso that he will re-transfer 
it to the mortgagor upon payment of the mortgage-money 
as agreed, the transaction is called an English mortgage.
(f) Mortgage by deposit of title-deeds.—Where a person in 
any of the following towns, namely, the towns of Calcutta, 
Madras, and Bombay, and in any other town which the 
State Government concerned may, by
notification in the 
Official Gazette, specify in this behalf, delivers to a creditor 
or his agent documents of title to immoveable property, 
with intent to create a security thereon, the transaction is 
called a mortgage by deposit of title-deeds.
(g) Anomalous mortgage.—A mortgage which is not a 
simple mortgage, a mortgage by conditional sale, an 
usufructuary mortgage, an English mortgage or a mortgage 
by deposit of title-deeds within the meaning of this section 
is called an anomalous mortgage.”
(emphasis supplied)
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A.B. Govardhan v. P. Ragothaman 
27.	 In Syndicate Bank v Estate Officer & Manager, APIIC Ltd. (2007) 
8 SCC 361, this Court held:
“28. The requisites of an equitable mortgage are : (i) a 
debt; (ii) a deposit of title deeds; and (iii) an intention that 
the deeds shall be security for the debt. The existence 
of the first and third ingredients of the said requisites is 
not in dispute. The territorial restrictions contained in the 
said provision also does not stand as a bar in creating 
such a mortgage. The principal question, which, therefore, 
requires consideration is as to whether for satisfying the 
requirements of Section 58(f) of the Transfer of Property 
Act, it was necessary to deposit documents showing 
complete title or good title and whether all the documents 
of title to the property were required to be deposited.  
A fortiori the question which would arise for consideration 
is as to whether in all such cases, the property should 
have been acquired by reason of a registered document.
xxx
38. In K.J. Nathan v. S.V. Maruty Reddy [AIR 1965 SC 430: 
(1964) 6 SCR 727] this Court held: (AIR pp. 435-36, para 
10)
“10. The foregoing discussion may be summarised 
thus: Under the Transfer of Property Act a mortgage by 
deposit of title deeds is one of the forms of mortgages 
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. The three 
requisites for such a mortgage are, (i) debt, (ii) deposit of 
title deeds; and (iii) an intention that the deeds shall be 
security for the debt. Whether there is an intention that 
the deeds shall be security for the debt is a question of 
fact in each case. The said fact will have to be decided 
just like any other fact on presumptions and on oral, 
documentary or circumstantial evidence. There is no 
presumption of law that the mere deposit of title deeds
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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. The decisions of English Courts 
making a distinction between the debt preceding the 
deposit and that following it can at best be only a guide; 
but the said distinction itself cannot be considered to 
be a rule of law for application under all circumstances. 
Physical delivery of documents by the debtor to the 
creditor is not the only mode of deposit. There may be 
a constructive deposit. A court will have to ascertain in 
each case whether in substance there is a delivery of 
title deeds by the debtor to the creditor. If the creditor 
was already in possession of the title deeds, it would 
be hypertechnical to insist upon the formality of the 
creditor delivering the title deeds to the debtor and the 
debtor redelivering them to the creditor. What would
be 
necessary in those circumstances is whether the parties 
agreed to treat the documents in the possession of the 
creditor or his agent as delivery to him for the purpose 
of the transaction.”
The question which arose therein was that what would be 
the extent of subject-matter of mortgage; the entire property 
forming the subject-matter of mortgage or a part thereof.”
(emphasis supplied)
28.	 In the interest of completeness, we may note that the Bench 
of 2 learned Judges in Syndicate Bank (supra) had referred to 
a larger Bench, the question as to whether a property could be 
equitably mortgaged by deposit of documents other than the title
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1017
A.B. Govardhan v. P. Ragothaman 
deeds or registered title document. However, the 3-Judges Bench 
in Syndicate Bank v Estate Officer and Manager (Recoveries), 
Andhra Pradesh Industrial Infrastructure Corporation Limited 
(2021) 3 SCC 736 was “of the opinion that the reference need not 
be answered in the peculiar facts and circumstances of the case 
since in our opinion the State of Andhra Pradesh and its successor 
viz. APIIC and Telangana Industrial Infrastructure Ltd., are estopped 
from challenging the validity of the mortgage.” In State of Haryana 
v Narvir Singh (2014) 1 SCC 105, this Court observed:
“11. A mortgage inter alia means transfer of interest in the 
specific immovable property for the purpose of securing 
the money advanced by way of loan. Section 17(1)(c) 
of the Registration Act provides that a non-testamentary 
instrument which acknowledges the receipt or payment of 
any consideration on account of the creation, declaration, 
assignment, limitation or extension of any such right, title 
or interest, requires compulsory registration. A mortgage 
by deposit of title deeds in terms of Section 58(f) of the 
Transfer of Property Act surely acknowledges the receipt 
and transfer of interest and, therefore, one may contend 
that its registration is compulsory. However, Section 59 of 
the Transfer of Property Act mandates that every mortgage 
other than a mortgage by deposit of title deeds can be 
effected only by a registered instrument.
In the face of it, 
in our opinion, when the debtor deposits with the creditor 
title deeds of the property for the purpose of security, 
it becomes a mortgage in terms of Section 58(f) of the 
Transfer of Property Act and no registered instrument is 
required under Section 59 thereof as in other classes of 
mortgage. The essence of a mortgage by deposit of title 
deeds is the handing over, by a borrower to the creditor, 
the title deeds of immovable property with the intention 
that those documents shall constitute security, enabling 
the creditor to recover the money lent. After the deposit of 
the title deeds the creditor and borrower may record the 
transaction in a memorandum but such a memorandum 
would not be an instrument of mortgage. A memorandum 
reducing other terms and conditions with regard to the 
deposit in the form of a document, however, shall require
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registration under Section 17(1)(c) of the Registration 
Act, but in a case in which such a document does not 
incorporate any term and condition, it is merely evidential 
and does not require registration.
12. This Court had the occasion to consider this question 
in Rachpal Mahraj v. Bhagwandas Daruka [1950 SCC 195 : 
AIR 1950 SC 272] and the statement of law made therein 
supports the view we have taken, which would be evident 
from the following passage of the judgment: (AIR p. 273, 
para 4)
“4. A mortgage by deposit of title deeds is a form 
of mortgage recognised by Section 58(f) of the TP 
Act, which provides that it may be effected in certain 
towns (including Calcutta) by a person ‘delivering 
to his creditor or his agent documents of title to 
immovable property with intent to create a security 
thereon’. That is to say, when the debtor deposits 
with the creditor the title deeds of his property with 
intent to create a security, the law implies a contract 
between the parties to create a mortgage, and no 
registered instrument is required under Section 59 as 
in other forms of mortgage. But if the parties choose 
to reduce the contract to writing, the implication is 
excluded by their express bargain, and the document 
will be the sole evidence of its terms. In such a case 
the deposit and the document both form integral parts 
of the transaction and are essential ingredients in 
the creation of the mortgage. As
the deposit alone is 
not intended to create the charge and the document, 
which constitutes the bargain regarding the security, 
is also necessary and operates to create the charge 
in conjunction with the deposit, it requires registration 
under Section 17 of the Registration Act, 1908, as a 
non-testamentary instrument creating an interest in 
immovable property, where the value of such property 
is one hundred rupees and upwards. The time factor 
is not decisive. The document may be handed over 
to the creditor along with the title deeds and yet may 
not be registrable.”
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A.B. Govardhan v. P. Ragothaman 
13. This Court while relying on the aforesaid judgment in 
United Bank of India Ltd. v. Lekharam Sonaram & Co. [AIR 
1965 SC 1591] reiterated as follows: (AIR p. 1593, para 7)
“7. … It is essential to bear in mind that the essence 
of a mortgage by deposit of title deeds is the actual 
handing over by a borrower to the lender of documents 
of title to immovable property with the intention that 
those documents shall constitute a security which 
will enable the creditor ultimately to recover the 
money which he has lent. But if the parties choose 
to reduce the contract to writing, this implication of 
law is excluded by their express bargain, and the 
document will be the sole evidence of its terms. In 
such a case the deposit and the document both form 
integral parts of the transaction and are essential 
ingredients in the creation of the mortgage. It follows 
that in such a case the document which constitutes 
the bargain regarding security requires registration 
under Section 17 of the Registration Act, 1908, as a 
non-testamentary instrument creating an interest in 
immovable property, where the value of such property 
is one hundred rupees and upwards. If a document 
of this character is not registered it cannot be used 
in the evidence at all and the transaction itself cannot 
be proved by oral evidence either.”
xxx
14.2. But the question is whether a mortgage by deposit 
of title deeds is required to be done by
an instrument at 
all. In our opinion, it may be effected in a specified town 
by the debtor delivering to his creditor documents of title 
to immovable property with the intent to create a security 
thereon. No instrument is required to be drawn for this 
purpose. However, the parties may choose to have a 
memorandum prepared only showing deposit of the title 
deeds. In such a case also registration is not required. But 
in a case in which the memorandum recorded in writing 
creates rights, liabilities or extinguishes those, the same 
requires registration.
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14.3. In our opinion, the letter of the Finance Commissioner 
would apply in cases where the instrument of deposit 
of title deeds incorporates the terms and conditions in 
addition to what flows from the mortgage by deposit of 
title deeds. But in that case there has to be an instrument 
which is an integral part of the transaction regarding the 
mortgage by deposit of title deeds. A document merely 
recording a transaction which is already concluded and 
which does not create any rights and liabilities does not 
require registration.
14.4. Nothing has been brought on record to show existence 
of any instrument which has created or extinguished any 
right or liability. In the case in hand, the original deeds have 
just been deposited with the Bank. In the face of it, we are 
of the opinion that the charge of mortgage can be entered 
into revenue record in respect of mortgage by deposit of 
the title deeds and for that, an instrument of mortgage is 
not necessary. A mortgage by deposit of the title deeds 
further does not require registration. Hence, the question of 
payment of registration fee and stamp duty does not arise.
xxx
14.5. By way of abundant caution and at the cost of 
repetition we may, however, observe that when the 
borrower and the creditor choose to reduce the contract 
into writing and if such a document is the sole evidence 
of the terms between them, the document shall form an 
integral part of the
transaction and the same shall require 
registration under Section 17 of the Registration Act.”
(emphasis supplied)
29.	 We are of the opinion that the Single Judge has appreciated the 
law correctly as far as the Agreement is concerned to hold it to 
be a mortgage in view of Section 58(f) of the Act. We have read 
and re-read the Agreement. We have also minutely considered the 
exposition of law made in Narvir Singh (supra). We are of the opinion 
that the Agreement only records what has happened and does not 
create/extinguish rights/liabilities. It would, therefore, be covered by 
para 14.3 of Narvir Singh (supra), as highlighted hereinbefore. The 
reasoning of the Division Bench proceeds as under:
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1021
A.B. Govardhan v. P. Ragothaman 
“10. …The recitals of the document marked as Ex.P1 and 
duly extracted in the judgment does not contain any, clear 
admission that a mortgage was created on the property. 
The document proceeds as if the appellant agreed to pay 
a sum of Rs.11 lakhs in full and final settlement. There 
is nothing to show that a mortgage was created. Even in 
the evidence given by the respondent as P.W.1, it was 
his case that the parent document was handed over only 
as a security. Such being the evidence on record, the 
learned single Judge was not correct in giving a ﬁnding 
that mortgage was created and the title deed was given in 
furtherance of the mortgage. We are therefore of the view 
that there is no evidence adduced by the respondent to 
show that a mortgage deed was executed by the appellant 
and as such, he is entitled to a mortgage decree. …”
(sic)
30.	 Quite evidently, the Division Bench did not account for Section 58(f) 
of the Act. Indubitably, the respondent pleaded threat and coercion 
whilst executing/signing the Agreement, yet having accepted that he 
did sign the same in his own hand, the burden was on him to prove 
such threat/coercion. Looked at from any angle, the First Impugned 
Order suffers from legal errors, and cannot withstand the scrutiny 
of law. At the cost of repetition, it is to be stated that the Single 
Judge has rightly considered the factual prism and focused on the 
core issue without reference to
facts which were irrelevant and not 
germane to the issue(s) before her. 
31.	 The Second Impugned Order raises serious questions about how and 
why the appellant went into slumber. If we may say so, a ‘fantastic’ 
plea was taken that the appellant had engaged a counsel only for 
the delay condonation MP and not to argue the main appeal. Such 
a contention is noted only for the purpose of outright rejection. This 
‘fantastic’ plea has been dealt with correctly by the Division Bench 
and no legal infirmity can be found therein.
32.	 Alas, only if things were as simple as they seemed! We have already 
indicated that the First Impugned Order has to be set aside. In order 
to do justice, quashing of the First Impugned Order would necessarily 
mean that the effect of the Second Impugned Order would get 
nullified, for all practical purposes, despite this Court being of the
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view that on its own merits, the Second Impugned Order cannot be 
faulted. However, for such legal misadventure resulting in wastage 
of precious judicial time of the High Court, which could have been 
better spent answering the call of justice raised by the teeming 
millions, we impose costs of Rs.1,20,000/- (Rupees One Lakh Twenty 
Thousand) on the appellant. Such cost shall be deposited within 6 
weeks with the Registry of the High Court, to be utilised as follows:
i.	
Rs.40,000 for juvenile welfare in a manner to be decided by 
the Juvenile Justice Monitoring Committee;
ii.	
Rs.40,000 for welfare of the Advocate-Clerks in a manner to 
be decided by Hon’ble the Acting Chief Justice, and;
iii.	
Rs.40,000 for legal aid in a manner to be decided by the High 
Court Legal Services Committee.
Receipt of deposit be filed in the Registry of this Court soon thereafter. 
In case of non-compliance, the matter will be placed before us with 
appropriate Office Report.
33.	 Accordingly, both Impugned Orders stand set aside. The Judgment 
dated 01.04.2010 passed by the Single Judge stands restored with 
a slight modification i.e., reduction in the rate of interest which has 
been claimed by and allowed to the appellant. Interest at the rate 
of 36% p.a. is on the excessive side and we pare down the same 
to 12% p.a. in the interest of justice. Hence, simple interest will run 
only @ 12% p.a. from 24.06.2000 till the date of
realisation.
34.	 The appeals are allowed in the above terms.
35.	 I.A. No.16204/2019 for exemption from filing Certified Copy of the 
Impugned Judgment(s) is allowed. I.A. No.180367/2019 for permission 
to file Additional Documents is allowed.
36.	 I.A. No.16203/2019 seeks condonation of delay in filing the petitions. 
There is a delay of 589 days in filing the petition against the First 
Impugned Order. The petition against the Second Impugned Order 
is also delayed by approximately 84 days. We are cognizant that 
the appellant had moved the Division Bench seeking a fresh hearing 
of the main appeal, which led to passing of the Second Impugned 
Order. In Collector, Land Acquisition, Anantnag v Mst Katiji 
(1987) 2 SCC 107, the Court noted that it had been adopting a 
justifiably liberal approach in condoning delay and that “justice on
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A.B. Govardhan v. P. Ragothaman 
merits” is to be preferred as against what “scuttles a decision on 
merits”. Albeit, while reversing an order of the High Court therein 
condoning delay, principles to guide the consideration of an application 
for condonation of delay were culled out in Esha Bhattacharjee v 
Managing Committee of Raghunathpur Nafar Academy (2013) 
12 SCC 649. One of the factors taken note of therein was that 
substantial justice is paramount.8
37.	 In N L Abhyankar v Union of India (1995) 1 MhLJ 503, a Division 
Bench of the Bombay High Court at Nagpur considered, though 
in the context of delay vis-à-vis Article 226 of the Constitution, the 
decision in M/s Dehri Rohtas Light Railway Company Limited v 
District Board, Bhojpur (1992) 2 SCC 598, and held that “The real 
test for sound exercise of discretion by the High Court in this regard 
is not the physical running of time as such, but the test is whether by 
reason of delay there is such negligence on the part of the petitioner, 
so as to infer that he has given up his claim or whether before the 
petitioner has moved the Writ Court, the rights of the third parties 
have come into being which should not be allowed to be disturbed 
unless there is reasonable explanation for the delay.”9 The Bombay 
High Court’s eloquent statement of the correct position in law found 
approval in Municipal Council, Ahmednagar v Shah Hyder Beig 
(2000) 2 SCC 48 and Mool Chandra v Union of India, 2024
SCC 
OnLine SC 1878.
38.	 In the wake of the authorities above-mentioned, taking a liberal 
approach subserving the cause of justice, we condone the delay and 
allow I.A. No.16203/2019, subject to payment of costs of Rs.20,000/- 
(Rupees Twenty Thousand) by the appellant to the respondent.
Result of the case: Appeals allowed.
†Headnotes prepared by: Divya Pandey
8	
Para 21.3 of Esha Bhattacharjee (supra).
9	
Emphasis supplied.