Kerala High Court
Rema Suresh vs The District Registrar (General) on 19 June, 2017
Author: K. Vinod Chandran
Bench: K.Vinod Chandran
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN
THURSDAY, THE 5TH DAY OF OCTOBER 2017/13TH ASWINA, 1939
WP(C).No. 20171 of 2017 (V)
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PETITIONER(S):
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REMA SURESH,
W/O P.SURESH, AGED 44 YEARS,
KANNAMPARAMBIL HOUSE,
KALLEKULANGARA, PALAKKAD- 678 009.
BY ADVS.SRI.K.P.BALAGOPAL,
SRI.V.K.VENUGOPALAN.
RESPONDENT(S):
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1. THE DISTRICT REGISTRAR (GENERAL),
DISTRICT REGISTRAR GENERAL'S OFFICE,
PALAKKAD- 678 001.
2. THE SUB REGISTRAR,
OFFICE OF THE SUB REGISTRAR,
AGALI, PALAKKAD DISTRICT.
* ADDL. R3 IMPLEADED
3. VIJAYA BANK,
SAI BABA COLONY BRANCH, COIMBATORE,
REPRESENTED BY ITS MANAGER, VIJAYA BANK.
* ADDL. R3 SUO MOTU IMPLEADED AS PER ORDER DATED 19/06/2017
IN WP(C).NO.20171/2017.
R1 & R2 BVY GOVT. PLEADER SRI.B. VINOD.
ADDL. R3 BY ADVS. SRI.P.BENNY THOMAS,
SRI.D.PREM KAMATH.
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 05-10-2017, THE COURT ON THE SAME DAY DELIVERED
THE FOLLOWING:
rs.
WP(C).No. 20171 of 2017 (V)
APPENDIX
PETITIONER'S EXHIBITS:-
EXHIBIT P1 TRUE COPY OF THE SAID MEMORANDUM OF DEPOSIT OF TITLE
DEEDS NO.1288/1/2012 DATED 19-09-2012 OF THE SUB REGISTRAR'S
OFFICE, AGALI.
EXHIBIT P2 TRUE COPY OF THE ACCOUNT STATEMENT OBTAINED FROM
VIJAYA BANK, SAI BABA COLONY BRANCH, COIMBATORE.
EXHIBIT P3 TRUE COPY OF THE DEED FOR RELEASE OF THE MEMORANDUM
OF DEPOSIT OF TITLE DEEDS NO.1288/1/2012 OF SUB REGISTRAR'S
OFFICE PREPARED ON 31-05-2017.
EXHIBIT P4 TRUE COPY OF THE APPLICATION PREFERRED BY THE
PETITIONER BEFORE THE 1ST RESPONDENT FOR ADJUDICATION
OF STAMP DUTY.
EXHIBIT P5 TRUE COPY OF THE ORDER NO.G-1-2885/2017 DATED 06-06-2017
OF THE 1ST RESPONDENT.
RESPONDENT'S EXHIBITS:- NIL.
//TRUE COPY//
P.S.TO JUDGE
rs.
'C.R.'
K. VINOD CHANDRAN, J.
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W.P.(C) No. 20171 of 2017 (V)
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Dated: 05th October, 2017
J U D G M E N T
Ext.P5 order, directing stamp duty to be paid under Article 48(b) of the Kerala Stamp Act, 1959 ('Stamp Act' for short), is impugned herein.
2. The brief facts to be noticed are that the petitioner mortgaged certain properties with the additional respondent Bank; a mortgage by deposit of title deeds. The Branch insisted upon and hence a memorandum of deposit of title deeds was executed as per Ext.P1 and registered. When Ext.P1 document was registered, the stamp duty was levied under Article 6(2)
(iii) of the Stamp Act. An amount of Rs.10,000/- was paid as stamp duty and Rs.3,000/- as registration fee. The petitioner, on satisfying the loan, was issued with a W.P.(C) No. 20171/2017 -2- release of memorandum of deposit of title deeds, as seen at Ext.P3.
3. Before presenting the document for execution, for the purpose of adjudicating on the stamp duty, the petitioner approached the District Registrar under Section 31 of the Stamp Act. An order was passed at Ext.P5 finding the stamp required to be as per Article 48(b) of the Act; akin to a conveyance. The learned Government Pleader seeks to sustain the order on the contention that the release deed so presented, renounces a claim upon a specified property and in such cases, ad valorem duty as a conveyance; in proportion to the value of the property has to be paid. The learned Government Pleader also has a contention that, if at all, a different view is taken, the stamp has to be levied under Article 47 of the Act, which would require payment of registration fees at 2% of the value W.P.(C) No. 20171/2017 -3- of the property.
4. The memorandum of deposit of title deeds was registered under Article 6(2)(iii) of the Stamp Act affixing stamp of Rs.10,000/- and paying registration fee of Rs.3,000/-. The impugned order now directs payment of stamp duty as conveyance, fixing the stamp value based on the value of the property itself. This is definitely an anomalous situation where the release of title deeds would have to be registered with stamp duty far in excess of the duty levied on the memorandum evidencing the deposit of title deeds. The stamp duty levied at the time of registration was not one treating the document as creating any right over the property; much less a mortgage, in which event it would have been stamped under Article 37 of the Stamp Act. When canceling that document it is not discernible as to how there is a release of rights or a re-conveyance. W.P.(C) No. 20171/2017 -4-
5. A mortgage, as defined under Section 58 of the Transfer of Property Act, 1882 ('TP Act' for short), is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, existing or in future or the performance of an engagement which may give rise to a pecuniary liability. Section 58(f) of the TP Act permits, in any of the notified towns, a mortgage to be created by deposit of title deeds, if the debtor delivers to the creditor or his agent, documents of title to immovable property, with intent to create security thereon. Undoubtedly, where terms of a contract have been reduced to writing, no other evidence of the contract can be given than the written document itself. However, this rule would not apply when the document does not intend to express the whole agreement between the parties, W.P.(C) No. 20171/2017 -5- especially when the law does not mandate that the transaction should be reduced to writing.
6. Section 58(f) of the TP Act specifically permits a mortgage even without a written document, that too sans registration, as seen from the proviso to Section 48 of the Registration Act, 1908 ('Registration Act' for short). By Section 48 all non-testamentary documents duly registered under the Act, relating to any property movable or immovable, takes effect against any oral agreement or declaration relating to such property, unless the agreement or declaration was accompanied by delivery of possession, which constitutes a valid transfer under any law for the time being in force. The proviso to Section 48 reads so:
"Provided that a mortgage by deposit of title deeds as defined in section 58 of the Transfer of Property Act, 1882 (4 of 1882), shall take effect against any W.P.(C) No. 20171/2017 -6- mortgage deed subsequently executed and registered which relates to the same property."
When title-deeds are deposited with an intent to create a security, the law implies the creation of a mortgage and no registered instrument, as provided under Section 59 of the TP Act, or even a written instrument is required.
7. Joseph v. Micheal - 2000 (1) KLT 857 examined the necessity for registration of a memorandum of deposit of title-deeds and held so in paragraph 4:
"4. Mortgage by deposit of title deeds is created under S. 58(f) of the Transfer of Property Act. According to that Section such a mortgage comes into effect where a person in any of the notified towns delivers to a creditor or his agent documents of title to immovable property with intent to W.P.(C) No. 20171/2017 -7- create a security thereon. Execution of any memorandum evidencing the deposit is not essential for creation of such a mortgage; but very often some writing is obtained in that regard in the form of a memorandum or letter so that it will be a record which would evidence the transaction. But then, the time and date when such writing is prepared assumes importance. If the parties execute such memorandum intending to reduce the transaction to writing and it is done contemporaneously it will require registration in so far as it declares the creation of the mortgage.
However, the position would be
different if the execution of the
memorandum is not contemporaneous and it only confirms the fact of deposit ex-post facto. Surrounding circumstances can be looked into to see whether the execution was contemporaneous or whether it was done after the mortgage had come into W.P.(C) No. 20171/2017 -8- effect with the deposit accompanied by the intention to create a mortgage. If the memorandum as such does not evidence creation of the mortgage and only reveals what happened earlier it does not require registration. What is decisive of the question is the time factor and not the date. There is no bar in the execution of a memorandum evidencing the mortgage on the same day and the memorandum will not require registration provided it was executed after the deposit albeit on the same day. Rachpal Maharaja v. Bhagwandas Daruka (1950) SCR 548 which is the leading decision on the point does not lay down anything to the contrary. Eventhough the memorandum involved therein was executed on the same day as the deposit of title deeds it was found valid without registration as the deposit had preceded the execution of memorandum. It was held that the W.P.(C) No. 20171/2017 -9- memorandum only recorded a transaction already concluded."
8. In Kelukutty v. Young Mens Christian Association - 2016 (1) KHC 853 one of the issues raised was:
"Whether the agreement dated
27.12.2004, Ext.P3, which is an
unregistered document can be treated to be a mortgage deed or an integral part of the mortgage coupled with memorandum dated 31.12.2004 by which mortgage was created by deposit of title deeds and the agreement dated 27.12.2004 being unregistered can be relied for any purpose?
Ext. P3 referred to therein was an unregistered agreement between the debtor and the creditor, in the schedule of which the security by way of equittable mortgage of specified properties was mentioned. The memorandum dated 31.12.2004 (Ext.P2) was one of W.P.(C) No. 20171/2017 -10- deposit of title deeds. Both these documents were not registered and the Court answered the issue so in Paragraph 15:
"15. It is clear that by Ext.P3 which purported to create security interest in the property in A schedule that Ext.P3 cannot be treated as a document transferring any right in the land Schedule A nor it can be treated to be a mortgage. Section 17 of the Registration Act as quoted above clearly indicate that any deed transferring or creating any right in the immovable property requires registration. The Apex Court in Babu Parasu Kaikadi (Dead) by Lrs. v. Babu (Dead) by L.Rs. ((2004) 1 SCC 681 = AIR 2004 SC 754) had held that without execution of registered document no interest can be transferred in the land nor document can be treated as mortgage. The following was observed by the Apex Court in paragraphs 20 and 21:
'20. The contention of the respondent was that he has executed W.P.(C) No. 20171/2017 -11- an agreement for sale in the year 1967 with one Bajrang Maruti Kanse and, therefore, the landlord is not in possession. It is no doubt true that the Tribunal recorded a finding that the purchaser was in possession. Surprisingly, however, on perusal of the relevant documents, we find that the case set up by the respondent that he has executed an agreement for sale was not correct. In fact it was a mortgage with the right of re- conveyance and as such it was not an agreement for sale. Thus, the mortgagee was in possession of the land on behalf of the landlord because no title or interest was passed on in favour of the mortgagee, insofar as no registered document was executed transferring the interest in the land by the landlord in favour of the mortgagee.
21. In absence of any registered document having regard to the W.P.(C) No. 20171/2017 -12- provisions contained in Sections 17 and 49 of the Registration Act, no lawful title could pass on to the mortgagee. Lawful title as well as the legal possession of the land in question, therefore, remained with the landlord. The so-called mortgagee in the aforementioned circumstances must be held to have merely in permissive possession of the land. Such a possession, on the part of the so-called mortgagee, being not in his own right, the land could have been restored in favour of the appellant. The Appellate Authority correctly analysed the legal position. It is true that the Tribunal while reversing the judgment and order of the Appellate Authority came to a finding that a third party was in possession but such purported finding of fact has been arrived at on applying wrong legal tests and without taking into W.P.(C) No. 20171/2017 -13- consideration the effect of the provisions of the Transfer of Property Act and also the Indian Registration Act. In that view of the matter, the finding of the Tribunal was not sustainable. It is only in that premise the High Court arrived at a finding that the appellant has satisfied all conditions laid down under Section 32(1B) of the Act.' On a perusal of Ext.P2 it is clear that security interest was created in the Schedule A property by virtue of mortgage by deposit of title deeds as contemplated under Section 58(f) of the 1882 Act."
9 . Abdul Nazir Vs. Tahsildar - 2010 (1) KLT 519, considered quite a contrary situation and would throw distinguishing light on the contrasting situations. The mortgagor sold a portion of the mortgaged property when the mortgage was subsisting. On default, the W.P.(C) No. 20171/2017 -14- creditor proceeded against the mortgaged property which was sought to be resisted by the subsequent purchaser. Eventually, the subsequent purchaser discharged the liability of the mortgagor; with their concurrence. The creditor executed a 'release-cum- assignment deed' in favour of the purchaser. The issue was as to whether the stamp duty was under Article 48
(b) or Article 55(c)(ii). The Court held that the transfer was not of any interest secured by a mortgage deed and was a proper sale attracting stamp duty at the rate applicable to conveyance. There was a definite conveyance and transfer of interest in property; which is absent in the instant case.
10. The memorandum in this case, Exhibit P1, is only a document evidencing deposit of title deeds and the declaration made as found in Exhibit P1 is of the deposit of title deeds, having been made previously to W.P.(C) No. 20171/2017 -15- the execution of the document. Hence, the said document did not create any transfer of right over the property much less a mortgage. It is also not a compulsorily registerable document as per Section 17 of the Registration Act. The registration was made under Section 18 of the Act, a purely optional act.
11. This Court is unable to countenance both the arguments of the learned Government Pleader; since, the release of the title deeds can neither be said to be a release of claim on a specified property or the re-conveyance of a mortgaged property. Title never passed to the mortgagee bank nor was the possession handed over and there was not even creation of a mortgage by Exhibit P1, which only evidenced the deposit of title deeds having been made prior to the execution. The mortgage was created by the deposit of title deeds and on satisfaction of the loan, the title W.P.(C) No. 20171/2017 -16- deeds were released. What is essentially done is return of the deposited title deeds on the satisfaction of the loan, a cancellation of the earlier memorandum evidencing deposit of title deeds. There is no provision for stamping of such a document and hence the same has to be done under Article 15 of the Act, which refers to instruments by which a previously executed instrument is canceled and not otherwise provided for.
12. In such circumstance, Exhibit P5 is set aside and the Sub Registrar is directed to carryout the registration levying stamp duty under Article 15 of the Act and also levying the applicable registration fees.
The writ petition is disposed of. No Costs.
Sd/-
K.VINOD CHANDRAN, JUDGE jma/jjj 5/10/17