Summary
The Supreme Court restored a Single Judge's preliminary mortgage decree, holding that the debtor's handing over of title deeds as security for an admitted debt, recorded in a panchayat agreement, created a mortgage by deposit of title deeds under Section 58(f) of the Transfer of Property Act; the agreement merely recorded a concluded transaction and needed no registration. Interest was reduced from 36% to 12% a year, and the appellant was made to pay costs for his own lapses in the High Court.
Issues
- Whether the agreement of 24.06.2000, under which the debtor handed over the title deeds of his property in settlement of an admitted debt, evidenced a mortgage by deposit of title deeds under Section 58(f) of the Transfer of Property Act, 1882.
- Whether a writing recording such a deposit requires registration.
- Whether the debtor discharged the burden of proving his plea that he signed the admitted agreement under coercion.
- Whether the High Court rightly refused to recall its ex parte appellate judgment, and what relief and rate of interest should follow.
Provisions considered
- Section 58(f), Transfer of Property Act, 1882A mortgage by deposit of title deeds needs a debt, a deposit of title deeds and an intention that they be security; the Court found these met by the admitted debt and the handing over of title deeds recorded in the agreement, and faulted the Division Bench for ignoring the provision. (¶¶ 26, 27, 29, 30)
- Section 59, Transfer of Property Act, 1882Through Narvir Singh, noted that every mortgage other than one by deposit of title deeds must be effected by a registered instrument, so a mortgage by deposit of title deeds requires no registered instrument. (¶¶ 28, 29)
- Section 17(1)(c), Registration Act, 1908Following Narvir Singh, a memorandum that merely records a concluded deposit without creating or extinguishing rights is evidential and needs no registration; the agreement fell in that category. (¶¶ 28, 29)
- Article 136, Constitution of IndiaIn exercising its appellate jurisdiction the Court condoned delays of 589 and about 84 days on a liberal, justice-oriented approach, subject to costs. (¶¶ 17, 36, 37, 38)
Held
- The essentials of a mortgage by deposit of title deeds are a debt, a deposit of title deeds, and an intention that the deeds shall be security for the debt; no registered instrument is needed. A memorandum that only records a concluded deposit, without creating or extinguishing rights or liabilities, does not require registration. (¶¶ 27, 28, 29)
- The agreement of 24.06.2000, by which the debtor admitted the debt and handed over the title deeds of the schedule property, only recorded what had happened and created a mortgage by deposit of title deeds under Section 58(f); the mortgage was never redeemed, and the Division Bench erred in calling the plaint vague and in ignoring Section 58(f). (¶¶ 22, 29, 30)
- Every fact pleaded must be backed by oral or documentary evidence; a bald averment by a defendant takes his case nowhere. Having admitted signing the agreement, the debtor bore the burden of proving coercion. He led no evidence and took no civil or criminal steps for about five years to resile from it, so the plea failed. (¶¶ 24, 25, 30)
- As the debtor neither executed the sale deed for the property valued in the agreement nor paid the balance amount, the creditor was entitled to sue on the agreement. (¶ 23)
- The appellant's plea that he had engaged counsel only for the delay-condonation application and not the main appeal was rejected, and the High Court's refusal to recall its ex parte judgment could not be faulted on its own merits. But since the appellate judgment was set aside on merits, the refusal stood nullified, and costs were imposed on the appellant for wasting judicial time. (¶¶ 31, 32)
- Delay is to be approached liberally in favour of a decision on merits, the real test being whether the delay shows negligence amounting to giving up the claim; the delay in approaching the Supreme Court was condoned on costs. (¶¶ 36, 37, 38)
Result
Appeals allowed; both High Court orders set aside and the Single Judge's decree of 01.04.2010 restored, with interest reduced from 36% to 12% simple interest a year from 24.06.2000 till realisation; appellant to deposit costs of Rs. 1,20,000 in the High Court registry within six weeks for juvenile welfare, advocate-clerks' welfare and legal aid; delay condoned on payment of Rs. 20,000 to the respondent.