5 RACHPAL MAHRAJ "· BHAGW ANDAS. DARUKA [SHRI HARILAL KANIA c. J & Ors. v. Narayana Ayyar (58 I. A. 68) and Hari Sank

Shiva Prasad Sinha (Sri Kishan, with him) for the appellant. B. K. Saran for the 1st respondent. Respondents 2 to 13 did not enter appearance.

#1950. May 5. The jtidgrµent of the Court was delivered by SASTRI PATANJALI J.-This appeal arises out of suit brought by the respondents against the appel- a lant and other members of 11is family to enforce a mortgage alleged to have been created by the a11pel- lant by deposit of 1936, at Calcutta. title deeds on the 23rd October, 19"50 Rach pa!, Mahraj v. Bha.~wandas DarUka And Others Pataiyali Sn,tri ]. signed the memorandum The short point for determination in the appeal 1s and delivered by whether 1936, and relied upon the appellant on 23rd October, the cre:.ll ion of tne by the respondents as evidencing mortgage was compulsorily registrable under section 17 Indian Registration Act, 1903, and, not ha1ing of the in evidence to prove been registered, was Judge of Darbha!1ga the mortgage. who tried and the High Court at Patna on held that the document did not require registra appeal, tion 1md was admissible in evidence, and accordingly <lecrcnl the suit. inadmissible The Subordinate the suit, The question turns on the proper construction ot ·which die memorandum and the circumstances under it was delivered to the respondents. Accorrling evidence of the respondents' witnesses which has been accepted by the Courts below, the accounts relating to the 23rd the appellant's dealings were examined on October, 1936, and a large sum was found due to the respondents who deman<lcJ payment. appelhnt thereupon brought aml gave certain documents, being The 550 SUPREME COURT REPORTS [1950] 1950 Rach pal Mahraj v. Bhagwandas Daruka And Others Patanjali Sastri ]. title deeds relating to immovable to his family, for the amounts further dealings. A draft of thereafter prepared which him to be shown to his lawyer and he returned afternoon, and signed and delivered it ents. All this randum is in the form of a letter addressed respondents' firm and is in the following terms : properties belonging for the purpose of being held as security then due and to become due on the memorandum was took with the respond in Calcutta. The memo the appellant took place ... to you "We write to put on record that to secure the re from us on payment of the money already due the business . transactions between your account of that may here selves and ourselves and the money transactions after become due on account of this day deposited with you the following title we have in Calcutta at your . place of business at No. 7 to our properties at Sambhu Mullick Lane, equitable Samastipur with to secure all moneys mortgage on the including interest that may be found due and payable by us to you on account of the said transactions ........ " said properties to create relating intent an. (including Calcutta) A mortgage by deposit of title deeds is a form of mortgage recognised by section 58 (f) of the Transfer of Property Act which provides that it may be effected in , certain by a person "delivering to his creditor or his agent documents of title to immovable property with intent tg create a secu rity thereon." That is to say, when the debtor deposits with the creditor the title deeds of his property with intent to create a security, implies ·a contract between the parties to create a mortgage, and no regis tered instrument is required under Section 59 as other forms of mortgage. But if the parties choo, se the implication is exclud reduce the contract to writing, the document will be ed by the sole evidence of integral parts of deposit and the document both form the transaction and are essential in the creation of the mortgage. As the deposit alone is not to create the charge and the document, which intended their express bargain, and terms. In such a case ingredients the law 1950 RochJal Ma/irqj v. Bhagwandas D41'11ko And Othtrs Patanjali Saslri J. S.C.R. SUPREME COURT REPORTS 551 ) Or, to create it requires the charge constitutes the bargain regarding the ~ecurity, in conjunc necessary arid operates registration under tion with the deposit, section 17 of the Indian Registration Act, 1908, as a non-testamentary interest instrument creating an 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 the creditor along with the titl,e deeds and yet may not be registrable, as in Obla Sundarachariar v. Narayana it may be delivered at a later dated and Ayyar ( 1 nevertheless be registrable, as in Hari Sankar Paul v. ( 2 is: Did Kedar Nath Saha the parties intend to reduce ·their bargain regarding the deposit of the title deeds to the form of a docu ment ? If, on the other hand, surrounding circumstances lead to the parties did not intend ·to do so, there being t;Jien, no express bargain, the contract to create the mortgage arises by implication of the . law from . the deposit itself with the requisite and the document, being intention, merely evidential does not require registration. the document requires registration. the conclusion its proper construction The crucial question If so, ) There are numerous decisions, some of them not easy to reconcile, where this question was considered with reference to the document concerned in the parti It is unnecessary to review them, as the two cula:r case. latest pronouncements of the Privy Council, to which aptly illustrate cases falling reference has been made, on either side of the line. In Obla Sundarachariar v. Narayana Ayyar ( 1 ) a signed memorandum was deli vered to the mortgagee along with title deeds of cei:tain i;roperties deposited as security. The merrioran-. dum stated "As agreed upon in person, I have delivered as security," to you the under-mentioned documents It was held that the memorandum was no more than a mere record of the particulars of the deeds and did not require tration. The criterion. applied was : "No such memo randum can be within the section (section 17 of the Re gistration i\ct) unless on its face it embodies such title deeds deposited. listed the ( 1) 58 I.A. 68. (') 66 I.A 184. 1950 Roehpal MalrT'!f v. Blu1gwandas DOTuka And Others PaJahjali Sastri J. 552 SUPREME COURT REPORTS [1950J arranged as to lead legitimately is concerned, the parties." so far as the deposit the agreement between is signed and delivered at such time and place and in such circumstances conclusion that, constitutes In Hari Sankar Paul v. Kedar Nath Saha (') deeds were deposited accompanied by a memorandum ~ 'part of the advance for was made. the balance was advanced, So!lle days later when another memorandum was delivered and this was a formal document stating earlier one, the essential terms of the "hereby agreed" It also and referred to the moneys conferred an express power of sale on the mortgagee. after reviewing the eariler decisions Lord Macmillan, the document required registra of the Board, the parties profess tion, observing, title deeds ing to create a mortgage by a deposit of contemporaneously enter into a contractual agreement, in writing, whiih is made · an integral part of the transaction, instrument and not merely evidential, such the statute, be registered." is itself an operative a document must. "where, as here, "hereby secured". superseding transaction held that it was to show that Turning now to the memorandum before us, 1t 1s that the parties did not intend on the face of it, clear, thereby to create the charge. The document purports only to record a transaction which had been concluded and under which the rights and li~bilities had been taken by orally agreed upon. No doubt respondents the title deeds of the appel lant's properties were deposited with them as security and to obviate a for the moneys advanced by them, left with them for possible plea that the deeds were other purposes, as indeed was contended by the appel lant in his written statement, non-registration of the memorandum in question. But that is writing and make the document the basis of the rights In agreement with the and liabilities of the parties. High Court, we are of opinion, that the memorandum delivered by the appellant along with the title deeds taking. advantage of the bargain intending to reduce far from ('). 66 LA. 1~4. , $.c.R. SUPREME COURT REPORTS 553 deposited with the respondents did not require tration and was properly admitted the creation of the charge. in evidence to prove The appeal fails and is dismissed with costs. Appeal dismissed. Agent for the appellant: Tarachand Brijmohanlal. Agent for respondent No. 1 : S. P. Varma. I 1950 R~ Mfl"'qj v. · Bliagwandas Daruka AtttJ Othm P atanjali Sastri J. THE NEW PIECEGOODS BAZAR CO., LTD., BOMBAY ti. THE COMMISSIONER OF INCOME-TAX, BOMBAY 1950 May26 [SAIYID FAZL ALI, PATANJALI SASTRI, MEHR CHAND MAHAJAN and , MUKHERJEA JJ.] Indian Income-tax Act (XI of 1922), s. 9(1) (iv)-Income from .not being pt"Operty-Computation-Deductions-"Annual capital charge"-"Annual charge" ·and '~capital .charge", mean-· ittgi of-Charge for. municipal . property tax and urban immoveable pro,,my tax-Whether deductible--City of Bombay Municipal Act, 1888, s. 212--,-Bombay Finance Act, I 932, s. 22. charge The charge created in respect of municipal property tax by s. 212 af the City of Bombay Municipal Act, 1888, is an "annual charge not being a capital charge" within the meaning of s. 9 ( 1) (it) of the Indian Income-tax Act, 1922, and the amount of such charge should therefore be deducted in computing the income from such property for the purposes of .s- 9 of the Indian Income tax Act. The charge in . respect of urban created by the Bombay Finance Act, 1932, is similar in character and the amount of such charge should also be deducted_ immoveable property Tl* expression "capital charge" in s. 9 (1) (iv) means a charge created for a capital sum, that is to say, a charge created to secure liability of a capital nature; and an "annual charge" means a charge to secure an annual liability. the discharge of a