Madras High Court
Ride Master Rims Private Ltd. vs Ing Vysya Bank Ltd. on 31 July, 2006
Equivalent citations: AIR2007MAD34, AIR 2007 MADRAS 34, 2007 (2) ALL LJ NOC 255, 2007 (1) AKAR (NOC) 88 (MAD), 2007 A I H C (NOC) 210 (MAD)
Author: S.R. Singharavelu
Bench: S.R. Singharavelu
ORDER S.R. Singharavelu, J.
1. Original Application No. 264 of 2006 is filed by the applicant/plaintiff to pass an order of interim injunction restraining the respondent/defendant from bringing the schedule properties for sale, based on the alleged equitable mortgage dated 1 -1-2003 and Application No. 3452 of 2006 is filed by the respondent/defendant to vacate the order of ad interim injunction granted on 20-3-2006.
2. According to the applicant/plaintiff firm, it purchased the suit property from the owner and the documents were also placed before the Sub-Registrar Office, Avadi and the same was not returned due to deficit Stamp Duty.
3. In this context whether the claim of the respondent/defendant bank in having created the equitable mortgage on 1-10-2003 in its favour by the applicant/plaintiff is acceptable.
4. Mr. R. Krishnamurthi, learned senior counsel appearing for the Respondent Bank drew my attention to the petitioner's letter dated 1-10-2003 addressed to the Sub-Registrar of Assurances, Avadi, in the following lines:
You may kindly take note that we have created a mortgage on 1-10-2003 with ING Vysya Bank Limited, Mount Road branch based on the Xerox copy of the aforesaid deed and the receipt issued for payment of registration charges.
5. Another letter dated 2-10-2003 of the applicant/plaintiff evidencing deposit of title deeds addressed to the Respondent/Bank is found containing the particulars of the properties, of course, with an incorrect extent of 9.5 acres of land, whereas it should be 6.74. There is annexure to that letter indicating the list of documents deposited, wherein the last column shows "Xerox copy of sale deed executed by Tube Investment of India Ltd. in favour of Ride Master rims Pvt. Ltd." and "Sub-Registrar. Avadi Receipt for Rs. 4.16.550/- In document No. 2744/2002. There is no dispute that document No. 2744/2002 indicates the sale deed dated 29-7-2002 executed by Tube Investment India Ltd., in favour of the applicant/plaintiff.
6. Mr. T.V. Ramanujam, learned senior counsel appearing for the applicant/plaintiff pointed out that when all other documents, contained by the list of documents deposited (annexed to the letter dated 2-10-2003 of applicant/plaintiff evidencing deposit of title deeds) indicate that there were original documents deposited, no such term is found as against the last column, mentioning about the Sub-Registrar's Receipt as well as the sale deed in favour of the applicant/plaintiff, over which creation of equitable mortgage is claimed by the Respondent. It was again pointed out that there Is variation in the extent of land. Variation may some times be clerical mistake. What we are mainly concerned with is about the deposit of title deeds. I have perused the papers and find the last column mentioning as if, "Sub-Registrar, Avadi Receipt of document No. 2744/2002," and "Xerox copy of that sale deed was produced before the Respondent/Bank." I am satisfied with the case of Bank on that aspect, despite the answer to the column "whether original/certified true copy/photo copy" has been filled up or not.
7. The next question that would arise is as to whether there could be a creation of equitable mortgage with Xerox copy of a particular document. In this connection reliance was placed upon by the applicant/ plaintiff in a case law reported in R. Janakiraman v. State rep. by Inspector of Police, C.B.I., SPE., Madras . In that case original title deeds were not deposited. What were deposited were not title deeds, but only a certificate issued by the Co-operative House Building Society, certifying that the appellant is owner of the particular building and two receipts showing that the appellant had paid some electric charges. The alleged mortgage by deposit of title deeds was based upon Ex. P69 in that case, which was also not produced. In that context it was held that the equitable mortgage was also a make-believe and not real one, inasmuch as no document of title was shown to have been deposited.
8. What is document of title was mentioned at page 149 of 1992 Vol. 74 Company Cases 139 C. Assiamma v. State Bank of Mysore, which is as follows:
By 'documents of title' we mean the legal instruments which prove the right of a person in a particular property When a person who is acclaimed and recognised by law as the owner of property transfers his rights by an instrument which satisfies all the requirements of law, the instrument of transfer is a title deed in respect of the property so far as the transferee is concerned.... A copy of a deed of transfer is not ordinarily a document of title for the purposes of an equitable mortgage. It is the original deed of transfer that is the document of title.... At the same time there may be cases where the original document is lost and there are no chances of that document being made use of for any purpose. In the absence of the original deed of transfer the next best evidence of the owner's title to the property is a certified copy of that document. A certified copy in such cases may with sufficient safeguards be received as a document of title.
9. The same view was taken by a Division Bench of this High Court in M.A.V.R. Nataraja Nadar & Sons, Virudhunagar, etc. v. State Bank of India, Vlrudhunagar Branch, etc. 1993 I Law Weekly 456, wherein for the question whether the equitable mortgage can be created without depositing, all the relevant documents, there were number of decisions taken for consideration and they are as follows:
AIR 1925 Madras 723 (DB) : 1973-I MLJ 334 (DB) : 86 LW 94 : , , , and ultimately it was held that the view of the Kerala High Court in was correct and the same is as follows (AIR 162):
At the same time there may be cases where the original document is lost and there are no chances of that document being made use for any purpose. In the absence of the original deed of transfer the next best evidence of the owner's title to the property is a certified copy of that document. A certified copy in such cases may with sufficient safeguards be received as a document of title.
10. In a subsequent case before the Division Bench of this Court reported in Rajagopal v. State Bank of Travancore 1995-1 MLJ 175, it has been held that in order to create a valid equitable mortgage it is not necessary the original documents, of title to the property should be deposited and deposit of copy of the title deeds are sufficient to create an equitable mortgage and it is only the intention of the parties that is the prime factor to be considered.
11. In this connection in a case law reported in K.J. Nathan v. S.V. Maruty Reddy , it was held as follows:
The three requisites of a mortgage by deposit of title deeds 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 on the basis of the evidence.... On the facts of this case the intention to create a mortgage by deposit of title deeds can be inferred from the document dated 5th July, 1947 which was subsequently registered and in which the deposit of title deeds on May 10, 1947 was duly acknowledged... (ii) 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 Hit i tie deeds by the debtor to the creditor. If the creditor was already in possession of the title deeds, it would be hyper-technical to insist upon the formality of the creditor delivering the title deeds to the debtor, and the debtor re-delivering them to the creditor...there would be nothing out of the way in the parties, for their own reasons, giving up the idea of executing a formal document and being satisfied with the memorandum acknowledging the earlier form of security.
12. It was further held in Angu Pillai v. M. S.M. Kasiviswanathan Chettiar , that "it is sufficient if the deeds deposited bona fide relate to the property or are material evidence of title or are shown to have been deposited with the intention of creating a security thereon.
13. In this case the debt is not disputed. The fact that the sale deed In document No. 2744/2002 in the office of the Sub-Registrar. Avadi relates to the sale deed in favour of the petitioner is also not disputed. The fact that the original of such document is retained by the Sub-Registrar for want of Stamp Duty is also admitted.
14. I have already found that the Xerox copy of the above sale deed along with the Receipt of the Sub-Registrar for having registered the same were found deposited with the Respondent Bank by applicant/plaintiff.
15. Mr. T.V. Ramanujam, learned senior counsel for the applicant/plaintiff submitted that since the value is it is only (sic) after registration a deed will become a sale deed in the eye of law making a transfer of title in favour of the applicant/plaintiff. There could be no xerox of a sale deed after registration document in dmand is impounded (sic). What was submitted even assuming was only a xerox copy of a draft sale deed. According to the learned senior counsel that can never be a document of title as envisaged in the above cited case law.
16. But it is accepted proposition of law that certificate of registration before the Sub-Registrar Office is proof of execution of a document. Therefore the production of the Receipt of the Sub-Registrar for having registered the document No. 2744/12002 which undoubtedly relates to the sale deed in favour of the applicant/plaintiff may go to show that the sale deed the xerox copy of which was deposited, was proved to have undergone process of registration on the same day and therefore it becomes a document of title. The letter dated 1-10-2003 of the applicant/plaintiff along with the annexure of list of documents of deposit do show the intention of the parties. There is also ample evidence to hold that the applicant/plaintiff himself has mentioned the creation of equitable mortgage as first mortgage subject to which the second mortgage was made by him.
17. In consideration of these aspects, I find that there is a valid creation of equitable mortgage in favour of the Respondent/Bank and therefore no injunction could be granted. Original Application No. 264 of 2006 is dismissed. Application No. 3452 of 2006 is allowed. Interim injunction granted by this Court order dated 20-3-2006 is vacated.