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

1. In the suit which is ther of this appeal the plaintiff alleged that on August 11, 1945 the defendants created an equitable mortgage to secure advances made by the plaintiff up to the limit of one lakh of rupees ast to carry on their business. It was further alleged that the mortgage was created by the deposit of two title deeds at Calcutta on August 11, 1945 with regard to two houses and there was a letter of authority dated August 9, 1945 [Ex. 7 (a)] as addressed by Defendant No. 2 Lakharam to the plaintiff authorising Defendant No. 4Babulal Ram to deposit the title deeds. On August 10, 1945 Sonaram Defendant No. 3, brother of Defendant No. 4 addressed a letter to the Manager of thek authorising Defendant No. 4 his younger brotherto deliver the title deeds for deposit and to negotiate further in this respect. The letter of Sonaram is Ex. 7 (b). On August 11, 1945 Babulal Ram, Defendant No. 4 wrote a letter (Ex. 12) addressed to the Manager of thek containing the Schedule of documents said to have been deposited with thenamely the title deeds of 17th September 1927 and 13th December 1937. The suit was contested by the defendants on the ground that the title deeds were not deposited at Calcutta with a view to create an equitable mortgage, and that in any case, the document Ex. 7 (a) constituted a bargain between the parties and required registration under, S.17 of the Registration Act. It was contended on behalf of the defendants that in the absence of the registration the plaintiff was not entitled to a mortgage decree.        2. The trial Court considered that Exs. 1 (a) and 7 (b) were not merely a record of past transactions but created an equitable mortgage and, therefore, required registration under S. 17 of the Registration Act. The trial Court, therefore, granted a money decree in favour of the plaintiff for the amount claimed in the plaint along with interest @ 6 per cent. p. a. from the date of, the decree and costs. The plaintiff took the matter in appeal before the High Court which expressed the view that Exs. 7 (b) and 12 were not of much consequence and Ex. 7 (a) was the material document to be construed in the case and the High Court took the view that Ex. 7 (a) written by Lekharam, Defendant No. 2 was meant to be an integral part of the transaction and was not intended to be mere evidence for the deposit of the title deeds. The High Court accordingly held that the plaintiff was not entitled to a mortgage decree and, therefore, dismissed the appeal.

Court's reasoning:
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