O (i) United Bank of India Ltd v. Messrs Lekharam Sonaram and Co. and othersl

Judgment

1. This appe:il is filed by the appellant aggrieved by the judgment and decree passed by the learned II Additional District Judge, Nalgonda, Suryapet in O.S.No.2 of 2Ot4, dated 07.O2.2O2O.

2. Appellant is the defendant and respondent is the plaintiff in the suit. For the sake of convenience, the parties will be hereinafter referred to as the plaintiff and the defendant.

3. The plaintiff has hled suit for recovery of amount of Rs.18,67,0O0/- and for preliminary decree directing the defendant to pay the suit amount by granting reasonable time for redemption of mortgage plaint schedule property, in the event of failure to redeem the mortgage property in accordance with preliminary decree, to pass a final decree for sale of mortgaged immovable plaint schedute property in terms of Order 34 of Code of Civil procedurc, 19Og for realization of decreetal amount with subsequent interest at the rate of 24o/o per annum.

4. The contention of the plaintiff in the plaint is that the defendant has borrowed an amount of Rs.15,O0,OOO/- from him on 27.12.2012 for development of her business, executed a promissory note al Vijayawada in his favour and on the same day agreed to repay the 2/ t4 BRMR, J AS.No.305 of 2020 _t:l borrowed amount with interest at the rate of 24o/o per annum. The plaintiff has insisted for security, the defendant has provided the suit property i.e., two storied building constructed in an extent of 313 sq.yds bearing Door No.1-7-11612ll in Survey No.9, Ward No.9 of Suryapet Municipality within the boundaries by depositing the title deed dated 20.O1.1996. The defendant has executed memorandum of deposit of title deed on 31.72.2OI2 in favour of the plaintiff. In spite of demands made by the plaintiff, defendant has failed to repay the amount

5. Defendant ftled her \r,ritten statement contending that she neither borrowed any amount from the plaintiff nor created equitable mortgage of the scheduled property. Son of the defendant by name K. Ramakrishna Reddy is doing transport business at K.P.H.B. at Hyderabad and he got acquaintance with one Narendar Chowdary. The son of the defendant requested Narendar Chowdary to advance loan for his business needs, as Narendar Chowdary had no money with him he introduced one Ravikanth to her son. Son of the defendant through Narendar Chowdary obtained loan of Rs.6,0O,O00/ - from Ravikanth, in turn he handed over two singed blank cheques and original registered sale deed No.88/1996 relating to the suit property. On 07.01.2O13 the son of the defendant made part payment of Rs.4,12,5OO/- along with interest to Ravikanth and also paid remaining amount of Rs.2,O0,00O/- r;r,ith interest on --.. !'i6':r rt ) 3l 1.4 BRMR, J AS.No 305 of 2020

29.01.2013 to Ravikanth through Narendar Chowdary. In spite of discharging the amount by her son, Ravikanth and Narendar Chowdary did not return the singed blank cheques and original registered sale deed which were kept with him as security and postponed to return the same. In the month of September 2013, the son of the defendant received phone call from Sheelam Govind Reddy claiming an amount of Rs. 15,00,000/ - otherwise the matter will be moved before the Court. The defendant never approached the plaintiff, nor she visited Vijayawada at any point of time. The defendant has sufhcient agricultural properties, two buildings at Suryapet town and getting rents. Thc son of the defendant got issued legal notice on

18.12.2013 to Ravikanth and Sheelam Govind Reddy demanding them to return the cheques and original registered sale deed belonging to the defendant, after receiving the said 1ega1 notice the present suit came to be hled and prayed to dismiss the same.

6. The Trial Court basing on the pleadings ol the parties has framed the follou'ing issues: 1) Whether the defendant borrowed Rs.15,OO,OO0/- from the plaintiff on 27 -I2.2O12 and executed demand Prornisson, note and created equitable mortgage of title deeds by executing a Memoraldum of deposit of title deeds in favour of the plaintifP 2) To what rclieP BRMR, J AS. No.305 of2020

7. Plaintiff got examined himself as PW1, also examined pW2 and PW3 in support of his contention, got marked Exs.A1 to A3. Defendant did not enter into the witness box. B. The Trial Court after going through the evidence let by the plaintiff and perusing the documents passed a preliminary decree with costs directing the defendant to pay Rs. 18,6Z,OOOl- with interest at the rate of 24o/o per annum on Rs.15,OO,OO0/- from the date of suit till the date of preliminary decree with further interest at the rate of 60/o per annum on Rs. 15,O0,00O/- from the date of preliminary decree tiil actual payment. The defendant is given three months time for redemption. If the defendant failed to redeem the mortgage within the time given by the Court, the plaintiff is at liberty to apply for final decree. If the saie proceeds of mortgage property are not sufficient to recover the decree amount the defendant is personally liable for balance amount.

9.I Learned counsel for the appellant submits that the appellant/ defendant had categorically denied the execution of the suit pro-note and the memorandum of deposit of title deeds as they are forged and fabricated documents. The learned Judge ought to have seen that the evidence adduced by the plaintiff clinchingly establish that there was no 3cquaintance between the appellant/defendant with that of respondent/plaintiff and no loan transaction has taken place. s/14 I]RMR, J AS.No.305 of 2020

9.2 The appellant/ defendant has filed I.A.No.g12 of 2013 under Section 45 of the Indian Evidence Act, Ig72 to send the promissory note dated 27 .12.2or2 and the arleged memorandum of deposit of title deed dated 31.12.2012 to the hand writing expert for the purpose of comparison of signature, which u,as dismissed by. the learned Judge vide order dated t2.O4 .2olg , aggrieved by the same appellant/defendant has preferred the civil Revision petition before the High Court vide CRp.No.3iS9 of 2Ot9 and the said CRp is pending, meanu'hile the learned Judge has passed tl,re judgment and decree. The appellant/ defendant ivas deprived of rhe opporLuniq/ to send the disputed document for handwriting expert and the Court is competent to compare the signatures of the defendanl under Section 73 ofthe Indian trvidence Act. 1822.

9.3 The memorandum of deposit of title deeds is compulsory registerable document under Section 17 of the Registrirtion Act, 19og but the learned Judge has erred and concluded that ir is not required to be registered under Section 17 of the Registration Act, 190g. The suit filed by the respondent/ plaintiff is not maintain,ble though the memorandum of deposit of title deeds was impounded by paying dehcit stamp dut-v and it is not a curable defect, memorandum of deposit of title deeds is invarid and not admissible document. To substantiate his contentions, has relied on the following decisions: BRMR, J AS.No.3O5 of 202O (i) United Bank of India Ltd Vs. Messrs Lekharam Sonaram and Co. and othersl, (ii) State of Haryana and Ors Vs. Navir Singh and Another2, (iii) Yellapu Uma Maheswari & Anr Vs. Budda Jagadheeswararao & Ors3, (iv) Golla Dharmanna Vs. Sakari poshet[r and Others 4, (v) Satti Venkateswara Reddy Vs. Mallidi Venkata Reddys and (vi) V.Madhusudhan Rao and 7 Others Vs. S.Nirmala Bai and 4 Others.o Prayed to allow the appeal by set aside the judgment and decree in O.S.No.2 of 2OI4, dated. OZ.O2.2O2O, passed by the learned II Additional District Judge, Nalgonda at Suryapet.

10. l,enard Senior Counsel for the respondent submits that the Trial Court has appreciated the evidence adduced by the respondent/ plaintiff and the appellant/ defendant has not entered into the witness box to substa.tiate her contention, no interference is called for and also relied on the decision cited by the rearned counser for the appellant in State of Haryana2, prayed to dismissed the same. 1i Heard learned counsel for the parties and perused the record

12. Now the point for consideration is: whether the impugned order suffers from any perversity or illegality and requires the interference of this Court or not? I AIR I 965 SC 1591 2 2014 l1l SCC 105 3 20ts (t 6) scc 287 1 AIR Online 2013 Ap 133 s AIR 2916 Hyderobod 24 6 lndon Konoon - http://indionkonoon.org/doc/ tO 7ggS899l 7lt+ T]RMR, J AS No.305 of 2020 POINT:

13. The Trial Court observed in paragraph No. 16 of its judgment that "from 2O.O9.2019 to 18.10.2019 three adjournmenrs were given to the defendant (appellant herein) for adducing evidence and after defense evidence was closed 1.A.No.962/2018 was filed and rhe same was dismissed on 12.).1.2019 and the matter is posted for arguments and later on the defendant filed another I.A.No.1023/2019 for reopening the case and the same v/as dismissed and later u,hen the Court insisted the defendant to argue the case, on 30.12.2019 u,ritten arguments were filed. Further earlier the defendant (appellant herein) hled petition under Section 45 of the Indian Evidence Act to send the document, but however the same was not pressed later by the defendalt. So, ultimately no defence evidence was adduced to prove the case of the defendant that the signature on Exs.Al and A3 do not belong to the defendant (appellant herein)".

14.1. trx.Al is the promissory note dated 27.12.2Ot2. Ex.A2 is the original registered title deed of the defendant darecl 20.Ol.1996 pertaining to the mortgage property. Ex.A3 is the original memorandum of deposit of title deed executed by the delendant dated

31.12.2012.

14.2. The english translation of Ex.A2 reads as under a/A BRMR, J AS.No.305 of 2020 "On 27.12.2O12 I have obrained a sum of Rs.15,00,000/- (Rupees fifteen lakhs only) as loan from you and executed a promissory note. As a security to the said loan anount I hereby deposit my original title deed bearing Doc.NO.88/1996 regd, at SRO, Suryapet in respect of my residential house bearing D.No.l Z-l16l2/1 admeasuring 313 sq. yards consisting two storied building with an intention to mortgage. This Memorandum is executed to show that the original document is deposited \a,ith you."

15. Learned counsel for the appellant strongly contended that Ex.A3 speaks that the executant intended to create a mortgage which is a compulsory registerable document and is hit by Section 17 of the Registration Act. Mere paying stamp duty penalty will not cure the defect.

16. 1 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 .t' @ryr:i* 7 9lt4 BRMR, J AS.No.305 of 2O20 securlng require registration under S. 17 of the Indian Registration Act, 1908 : United Bank of India Ltdr.

16.2- rt is well settled that the nomencrature given to the document is not decisive factor but the nature and substance of the transaction has to be determined with relerence to the terms ol t he documents and that the admissibility of a document is entirely dependent upon the recitals contained in that document but not on the basis of the pleadings set up by the party rvho seeks to introduce the document in question: Yellapu Uma Mahesv,,ari & Anr 3. 16-3. Mere paying stamp duty and penalty does not make an unregistered document admissible. An unregisterccl sale deed effecting immovable property cannot be admitted in evidence as per Section 49 of the Registration Act and it is compulsory registrable under Section 17(1)(b) of Registration Act, 19Og : Golla Dharmannaa.

16.4 . If it is a simple document depositing title deed as .a security, it would not have required registration, but when authorised the lender to take action for recovery of money on the basis of srrch deposit of title deed coupled with Memorandum, it requires registration: Satti Venkateswara Reddys.

16.5. A document which is not stamped as required under lau, cannot be received in any evidence for any purpose, Section 3.5 of the Indian LO/ t4 BRMR, J AS.No.305 of 2020 Stamp Act, 1899 makes this very clear. However, this is a curable defect and if the stamp duty and penaity is paid thereafter, the document becomes admissible. The proviso to Section 35 of the Indian Stamp Act, deals with this : V.Madhusudhan Raor.

17. At the time of marking the document i.e., memorandum of deposit of titie deeds through pWl, learned counsel for the appellant/ defendant before the trial court raised an objection that it was not registered and is liabre for stamp duty. Respondent/plaintiff has paid the deficit stamp duty with penalty under Sections 33 and 44 of the Stamp Act and thereafter Ex.A3 came to be marked through PW1. The evidence of PW1 is the replica of the plaint averments and he stated that the mortgage deed is not registered, the son of the defendant has not signed as a witness. prakash and Sathish are the attesters to pro-note (Ex.A1). Though pW1 was cross-examined but no incriminating material is elicited from his cross.

18. PW2 is the witness to Ex.Al, he deposed that the defendant after receipt of money executed the promissory note in favour of the plaintiff (respondent herein) and that the defendant (appellant herein) has deposited her original title deed dated 20.01.1996 as a security with an intension to create mortgage over the plaint schedule property for the debt due. In his cross-examination he stated that he has no objection to send the suit pro-note to the hand writing expert for B_7 tt ltl BRMR, .I AS.No.305 of 2020 comparison for the hand writing. He denied the suggestion that he is giving false evidence that the defendant did not exocute Exs.A1 and 43 and that the signatures do not belong to her.

19. PW3 is the another witness, who supported the evidence of pW2 in all aspects including deposit of original title deeds of the defendant (appellant herein). Though PW3 was cross examrned by the defendant's counsel, nothing material could be elicited.

20. The primary arguments of the appellant,s counsel is on Ex.A3 (memorandum of deposit of title deeds) that the document speaks the intent to create a mortgage by the appellant (defendant) in favour of respondent (plaintiff) and is hit by the Registration Act. 2),. The Supreme Court in State of Haryana and Ors2 observed at paragraph No.11, which reads as under: "11 A mortgage inter alia means transfer of interest in the specific immovable property for the purpose of securing the mone_t advanced b1. way of loan. Section 17(1)(c) of the Re8istration 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 deecls in terms of Section 58(0 of the Transfer of Property Act surely ackrorvledges the receipt and transfer o[ 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 cafl be effected only by a registered instrument. ln the face of it, in our opinion, when the debtor deposits u.ith the creditor title deeds of the property for the purpose of security, it becomes a t2lt4 BRMR, J AS.No.305 of 2020 mortBate in terms of Section 58(0 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 \4,ith 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 registration under Section l7(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."

22. The aforesaid decision cited by the appellant's counsel in fact assist the case of the respondent (plaintiff).

23. On close scrutiny of Ex.A3, I am of the hrm view that the essence of mortgage by deposit of title deeds is the handing over by a borrower to the creditor, title deeds of immovable property with the intension that the documents shall constitute security enabling the creditor to recover the money lent.

24. The Trial Court observed at paragraph No. 15 that "as can be seen from Ex.A3, in the same it is mentioned that the defendant borrowed Rs. 15 Lakhs from the plaintiff and as a security for the same she deposited registered sale deed but there are no other terms in the same permitting the plaintiff to take action if the defendant failed to repay the borrowed amount. So, as per the decision reported ,,, / ',/ .,' tsRMR, J AS.No.305 of202O by the counsel for the defendant, as in the present cast_. memorandum of understanding did not contain any term attracting the provisions of Section 17 of Registration Act, this Court is of the opinion that there is no need for registration of Ex. A3 as claimed by th. counsel for the de lend ant. "

25. I agree with the observations made by the .l.rial Court, in Furtherance of the same, the decision of the Supremr: Court in the case of State of Haryana2 is aptly applicable to the case on hand and hold that Ex.A3 cloes not incorporate any terms ancl conditions and the essence of trx.A3 goes ro show that it is by deposit of titre deeds in handing over the document by a borrower to the creditor which constitute a securit5r enabling the debtor to recover the money lent. The contention of the appellant,s counsel that Ex.A3 is compulsory registerable doc,ment is r-regatived. The decision cired by learned counsel for the appellant stated supra at paragraph Nos. 16. 1 to 16.5 do not assist his case in view of the fact that the casc facts referred above do not match with the case facts on hand.

26. Respondent/ plaintiff could able to prove that the appellant/ defendant has borrowed the amount and executed Ex.A1/pro_note and deposited her registered title deeds under Ex.A3 which is supported with the evidence of pW I to pW3 in all aspect s. '\__ t4/14 BRMR, .J AS.No 3OS of2O2O

27. Defendant did not enter into the witness box to prove her contention that she did not execute pro-note nor deposited her title deeds u,ith the respondent/ plaintiff.

28. I am of the firm view that the Trial Court has properly appreciated the evidence on record and rightly decreed the suit of the respondent/ plaintiff. There is no illegality or perversity in the judgment passed by the Trial Court and I am not inclined to interfere with the same. Hence, the point is answered accordingly.

29. A.S.No.305 ot 2O2O is dismissed. Interim orders if any stands vacated and miscellaneous application/applications pending, if any, shall srand closed. There shall be no order as to costs. //TRUE COPY// SD/. K. SRINIVASA RAO JOINT REGIsTRAR \/ Y.\1 SECTION OFFICER One Fair Copy to the Hon,ble Sri Justice B.R. MADHUSUDHAN RAO (For His Lordship,s kind perusal) To, 1 2 J 4 5 o 7 ,W VI Ugh The ll Additional Disklct Judge, Nalgonda, at Suryapet. 1'l LR Copies union of rndia, Ministry of Law, Justice and company I?:,::fl,?ta;:retary, The Secretary, Telangana High Court Advocate's Asr c6,,t-r#'i"nE'6i,iu"JiT5rjig,na, Hish court Buirdinss jififj3|,rij::ry, Hish One CC to Sri J. Rsfrvini Kumar, Advocate tOpUCl One CC to Sri Seeta Ramaiah Tenneti, Advocate tOpUCl Two CD Copies g qr, --. \lr i.] zs Jtjl ?t25 \\?, \..a' . ''.:iti:_:llilj- HIGH COURT DATED: 1810712025 JUDGMENT+DECREE AS.No.305 of 2020 DISMISSING THE APPEAL WITHOUT COSTS DN A$\ *