2024 INSC 640 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 9975-9976 OF 2024

[@ SPECIAL LEAVE PETITION (CIVIL) NOS.5034-5035 OF 2019 ]

A. B. GOVARDHAN … APPELLANT

VERSUS

P. RAGOTHAMAN … RESPONDENT

JUDGMENT

AHSANUDDIN AMANULLAH, J.

Heard Mr. Narendra Kumar, learned counsel for the appellant and

Mr. V. Prabhakar, learned Senior counsel for the respondent.

2. Leave granted. The pending applications shall be dealt with in the

final pages of this judgment.

3. The present appeals germinate from the:

3.1.
Signature Not Verified Final Judgment and Order dated 22.02.2017 (hereinafter referred
Digitally signed by
Anita Malhotra

to as the “First Impugned Order”) 1 passed by a Division Bench of the

Date: 2024.08.29
16:49:47 IST
Reason:

1
2017 SCC OnLine Mad 11918 | (2017) 3 CTC 777 | (2017) 3 Mad LJ 522 |
(2017) 4 LW 421.
 2

High Court of Judicature at Madras (hereinafter referred to as the “High

Court”) in Original Side Appeal 2 No.189 of 2011, whereby the appeal

filed by the respondent was allowed and Judgment dated 01.04.2010

passed by a Single Judge of the High Court in Civil Suit No.701 of 2005

(hereinafter referred to as the “suit”) was set aside.

3.2. Order dated 12.07.2018 (hereinafter referred to as the “Second

Impugned Order”) passed by the same Division Bench, whereby Civil

Miscellaneous Petition3 No.10107 of 2017 in OSA No.189 of 2011 filed

by the appellant seeking to “set aside” the First Impugned Order and

restore the main appeal for fresh hearing, was dismissed.

BRIEF FACTS:

4. The respondent (defendant in the suit) and his wife are engaged in

business of building materials. As per the appellant (plaintiff in the suit),

the respondent approached him in February, 1995 seeking a loan for his

business. The appellant advanced a loan of Rs.10,00,000/- (Rupees Ten

Lakhs) to the respondent on the security of his properties.

5. Since the respondent could not pay Stamp Duty on the Mortgage

Deed, it was agreed between the parties that the said sum be split into

2
Hereinafter abbreviated to “OSA”.
3
Hereinafter abbreviated to “CMP”.
 3

two registered mortgages and the balance in four promissory notes.

Accordingly, the respondent executed the following:

i) Mortgage Deed dated 16.03.1995 for Rs.1,00,000/-

(Rupees One Lakh) agreeing to repay the same together with

interest at 36% per annum4;

ii) Mortgage Deed dated 17.04.1995 for Rs.50,000/- (Rupees

Fifty Thousand) agreeing to repay the same together with

interest at 36% p.a., and;

iii) Four promissory notes for the balance amount of

Rs.8,50,000/- (Rupees Eight Lakhs Fifty Thousand).

6. Besides the two mortgages supra, the respondent borrowed the

remaining Rs.8,50,000/- (Rupees Eight Lakhs Fifty Thousand) in four

promissory notes on different dates. Since there was default in payment

of interest, the appellant demanded repayment of the amount due under

the four promissory notes. The respondent thereupon, in various

panchayats, promised to repay the amounts. Ultimately, in the

panchayat dated 24.06.2000, the respondent produced title document of

his property as security towards debt under the four promissory notes,

which has been noted in the Agreement dated 24.06.2000 (hereinafter

referred to as the “Agreement”). This Agreement, in essence, is the root

of the instant lis.

4
Hereinafter abbreviated to “p.a.”.
 4

7. The Agreement notes that the respondent owed a total amount of

Rs.11,00,000/- (Rupees Eleven Lakhs) to the appellant and in

settlement thereof, the respondent handed over the title deeds

pertaining to the property situated at No.33, Avvai Thirunagar, Chennai -

600111, admeasuring 1300 square feet of land together with 700 square

feet building (hereinafter referred to as the “schedule property”), which

was valued at Rs.9,00,000/- (Rupees Nine Lakhs). Per the Agreement,

the respondent agreed to register the Sale Deed as and when

demanded. Further, for re-paying the balance sum of Rs.2,00,000/-

(Rupees Two Lakhs), it was agreed that the respondent will redeem the

mortgaged property from the appellant and re-mortgage it elsewhere.

8. After the Agreement was entered into between the parties, the

promissory notes were returned which were torn-out in the panchayat.

Thereafter, the respondent neither executed a Sale Deed nor paid the

balance sum of Rs.2,00,000/- (Rupees Two Lakhs). As a result, the

appellant-plaintiff, filed the suit before the High Court, praying for:

“(I) granting a usual preliminary mortgage decree of

the Schedule mentioned property against the
defendant for the recovery of Rs.23,96,000/- together
with interest at 36% p.a. on Rs.11,00,000/- till the date
of realization;
And pass a final decree thereafter for sale of the
Mortgaged property;
(II) for costs of this suit; and for such other equitable
reliefs as may deem fit and proper in the
circumstances of the case and render justice.”
 5

(sic)

9. The Single Judge, after perusing the evidence on record and

hearing the parties, passed judgment dated 01.04.2010 holding that the

respondent-defendant had agreed to “create equitable mortgage by

depositing the title deeds”. Finding thus, the Single Judge decreed the

suit. Aggrieved, the respondent filed an intra-court appeal being OSA

No.189 of 2011 along with Miscellaneous Petition 5 No.1 of 2011, which

was an application seeking condonation of delay of 176 days. The

appellant through his advocate, Mr. V. Manohar received notice and filed

a counter-affidavit opposing the said condonation of delay application.

On 18.04.2011, the Division Bench was pleased to condone the delay,

subject to payment of cost of Rs.1,000/- (Rupees One Thousand) to the

appellant.

10. The Division Bench vide the First Impugned Order allowed the

appeal, holding that the appellant had failed to prove that there was a

mortgage executed by the respondent. It is to be noted that none

appeared for the appellant in the appeal. Subsequently, the appellant

filed CMP No.10107 of 2017 in OSA No.189 of 2011, praying therein to

“set aside” the First Impugned Order and for restoration of the main

appeal for fresh hearing. The appellant contended that his erstwhile

counsel (Mr. V. Manohar) was authorized only to appear in the MP filed

5
Hereinafter abbreviated to “MP”.
 6

to condone the delay [MP No.1 of 2011] and that there was no notice

issued to him after registering of the appeal. The Division Bench vide the

Second Impugned Order dismissed the CMP.

SUBMISSIONS BY THE APPELLANT-PLAINTIFF:

11. At the outset, the learned counsel for the appellant submitted that

the Division Bench of the High Court gravely erred in holding that the

plaint averments were not sufficient to conclude that there was a valid

mortgage entitling him to sue for a mortgage decree. It was submitted

that the plaint, read as a whole, alongwith the Agreement, the Proof

Affidavits and evidence of PW-1/appellant and DW1/respondent clearly

evince the fact that a loan was secured by the respondent by mortgaging

the schedule property. The amount in the Agreement pertains to loan

transactions for which the mortgage was created by the Respondent. It

was submitted that in such circumstances, the findings in the First

Impugned Order are highly erroneous.

12. It was submitted by learned counsel that the Single Judge has

rightly arrived at the conclusion that the present case is one where the

respondent agreed to create a mortgage by depositing the title deed.

There was an actionable debt and the respondent had fully intended that

the deed ought to be the security for the debt. The Single Judge had

also noted that the respondent in his evidence as DW1, had agreed to
 7

deposit the title deed to create an “equitable mortgage” for the loan

amount obtained by him from the appellant. Thus, the Single Judge had

rightly decreed the appellant's suit and passed preliminary decree of

mortgage.

13. It was further submitted that the Division Bench in the First

Impugned Order had erred in holding that there was no stipulation to pay

interest in the Agreement and that therefore the rate of interest as

granted by the Single Judge could not have been so granted. It was

submitted that various loans were advanced by the appellant to the

respondent categorically stipulating interest at the rate of 36% p.a. on

repayment. Once this contractual rate of interest was agreed upon by

the parties, there was no scope for the Division Bench to state that there

was no stipulation to pay interest in the Agreement. The Agreement had

to be read in conjunction with various promissory notes and documents

evidencing the mortgage and repayment of the loan with interest.

Learned counsel contended that the Division Bench erred in holding that

there was no prayer for grant of a personal decree against the

respondent. It was submitted that the prayer clause of the plaint would

show to the contrary.

14. On the Second Impugned Order, learned counsel for the appellant

submitted that the Division Bench went wrong in not appreciating that
 8

the appellant had never authorized his counsel to represent him in the

OSA and his vakalatnama was confined to the MP filed by the

respondent seeking condonation of delay of 176 days. The MP was

allowed by the Division Bench vide order dated 18.04.2011. Thereafter,

the appellant, claims learned counsel, was not served with any notice in

the OSA. The appellant submits that he was neither informed by his

counsel, Mr. V. Manohar or by the Registry of the High Court about the

status of the appeal.

15. It was further submitted that the Division Bench gravely erred in

holding that the vakalatnama was given to Mr. V. Manohar for appearing

in the MP for condonation of delay, the main appeal as also this Court. It

was submitted that Mr. V. Manohar, counsel, was practicing only in the

High Court. There was no question of the appellant authorizing any

counsel for taking up the case in this Court as and when a case would

come up. It was urged that a blanket printed statement on a

vakalatnama can never constitute the intention of a litigant authorizing

his/her/their counsel to represent the litigant in question in all courts and

all proceedings.

16. Learned counsel contended that the appellant’s advocate Mr.

Sukumar, who was appearing for the appellant in the Court at

Tiruvannamalai, called the appellant and informed him that a judgment

 9

showing the appellant’s name was published in one of the law reports

under the citation 2017 (3) MLJ 521 and it also showed that he went

unrepresented therein. The appellant categorically submits that it was

only then that the appellant came to know that the OSA arising from the

suit had been decided against him ex-parte. Prayer was made to allow

the appeals.

SUBMISSIONS BY THE RESPONDENT-DEFENDANT:

17. Per contra, learned senior counsel for the respondent submitted

that there is no merit in the present appeals and the impugned orders do

not call for any interference by this Court under Article 136 of the

Constitution of India (hereinafter referred to as the “Constitution”). It was

submitted that the Agreement does not refer to any mortgage having

been created, since the recitals therein make it clear that the Agreement

was to sell the schedule property to the appellant, and for the said

purpose alone, the title deed of the property was handed over to the

appellant. It was submitted that when the very genesis of the suit is the

Agreement and the Agreement per se does not disclose the creation of

any mortgage, a suit for foreclosure cannot be maintained and the

Division Bench had rightly held so. The findings in the First Impugned

Order that no mortgage has been created, stands justified in view of the

contents of the Agreement.

 10

18. Next, it was advanced that the plaint claims that Rs.23,96,000/-

(Rupees Twenty Three Lakhs Ninety Six Thousand) was due as per the

Agreement by including interest @ 36% p.a. till the date of institution of

the suit. It was submitted that no particulars have been set forth in the

plaint as to how this amount of Rs.23,96,000/- (Rupees Twenty Three

Lakhs Ninety Six Thousand) was arrived at. While the cause of action

pleaded in the suit makes reference only to the Agreement, the appellant

makes a claim in respect of the mortgages dated 16.03.1995 and

17.04.1995, while also reserving the right to take separate action. Thus,

it was submitted that the appellant has not put forth any specific case but

has attempted to intermingle the mortgages and/or promissory notes

with the Agreement. It was submitted that the mortgages dated

16.03.1995 and 17.04.1995 as also the promissory notes have been

merged to arrive at the figure of Rs.11,00,000/- (Rupees Eleven Lakhs),

which is being claimed as due from the respondent. It was further

submitted that the promissory notes have not been exhibited in the suit.

19. Learned Senior counsel also pointed out that in respect of the two

mortgages dated 16.03.1995 and 17.04.1995, the High Court in Second

Appeal6 No.1235 of 2014 (which emanated from a suit for redemption

filed by the respondent) passed an interim order dated 25.08.2022,

directing the respondent to pay the appellant a sum of Rs.10,00,000/-

6
Hereinafter abbreviated to “SA”.
 11

(Rupees Ten Lakhs), being the principal and interest on both the

mortgages. Subsequently, the High Court, by way of its final order dated

24.01.2023 in the said SA, noted the payments made by the respondent

to the appellant, the return of the original Mortgage Deeds and also the

cancellation of the mortgages. Thus, as the decree in the redemption

suit had been complied with, it dismissed the second appeal as having

become infructuous. Payment had been made and, after receiving the

same, the appellant had returned the original title deeds to the

respondent in respect of the property which was the subject-matter of

the two mortgages dated 16.03.1995 and 17.04.1995.

20. It was further submitted that in the criminal case filed by the

appellant against the respondent under Section 138 of the Negotiable

Instruments Act, 1881, this Court dismissed Special Leave Petition

(Criminal) No.994 of 20197, confirming the acquittal of the respondent.

As regards the Second Impugned Order, it was submitted that the facts

recorded therein speak for themselves and the appellant did not deserve

any indulgence. Based on the above pleas, the respondent has sought

dismissal of the instant appeals.

7
Order dated 28.08.2023 reads as below:
“Heard learned counsel for the petitioner.
After having perused the evidence of the petitioner- complainant, we are
satisfied that the acquittal of the respondent is a possible conclusion, which could have
been recorded by the High Court.
Though, something can be said about the manner in which the findings have
been recorded by the High Court, we are recording our findings after having perused
the evidence of the complainant. Hence, we concur with the ultimate order of the High
Court and accordingly, the special leave petition stands dismissed.
Pending application(s), if any, shall stand disposed of.”
 12

ANALYSIS, REASONING & CONCLUSION:

21. Having given our anxious thought to the lis, we find that the

Orders impugned need interference.

22. In our view, the Single Judge had appreciated the bundle of facts

in the correct perspective, that is, the respondent had, by way of the

Agreement, created a mortgage by deposit of title deeds. There was no

redemption of this mortgage. The Division Bench fell in error in

concluding that “The plaint averments are self-contradictory, vague and

does not make out a clear case of mortgage.” (sic). Moreover, the plea of

the respondent that the mortgage was redeemed is factually incorrect.

Another point not noted by the Division Bench is that the mortgage

which took care of the return of Rs.8,50,000/- (Rupees Eight Lakhs Fifty

Thousand), was never redeemed and initially, only re the two previous

mortgages, the principal amount of Rs.1,50,000/- (Rupees One Lakh

Fifty Thousand) was returned, without the agreed interest. As noted

above, subsequent to the passing of the Impugned Orders, in SA

No.1235 of 2014, interim Order dated 25.08.2022 had directed the

respondent to pay the appellant a sum of Rs.10,00,000/- (Rupees Ten

Lakhs), being the principal and interest on both the mortgages. This

stood complied with and the SA was dismissed as having become

infructuous on 24.01.2023.
 13

23. However, the Agreement envisaged property worth Rs.9,00,000/-

(Rupees Nine Lakhs) out of the total claimed due of Rs. 11,00,000/-

(Rupees Eleven Lakhs), being registered in favour of the appellant or his

nominee. The Agreement also stipulated that after redeeming the

earlier/previous mortgages, the respondent would re-mortgage for the

purpose of raising Rs.2,00,000/- (Rupees Two Lakhs). Thereafter, the

said sum of Rs.2,00,000/- (Rupees Two Lakhs) would be paid to the

appellant. The said condition was not followed through i.e., no Sale

Deed was executed and registered, nor was the sum of Rs.2,00,000/-

(Rupees Two Lakhs) paid. We are of the view that in such a case, it was

well-within the competence of the appellant to move the Court, which he

did by instituting the suit.

24. Another factor is that the appellant was not heard in the appeal, as

recorded in the First Impugned Order itself. Undoubtedly, in the face of

non-appearance by the appellant before it, the Division Bench was free

to proceed with final hearing of the appeal, as it did. However, what

seems to have transpired is that in the absence of the appellant, what

was averred by the respondent in the appeal was accepted as correct by

the Division Bench. Fact remained that the respondent admitted to

having executed Exhibit P-1 (the Agreement) and that the signature(s)

thereon were his, in the Proof Affidavit dated 01.03.2010 as also cross-
 14

examination dated 08.03.2010. No doubt, he (respondent) has denied its

voluntary execution and contended that it was under coercion and

threat, but no evidence was brought or led by him to support this plea.

The Division Bench opined, correctly, that “It is true that there was no

supporting evidence adduced by him to show as to how he was

threatened and forced to execute Ex.P1.” Pausing here, we may

emphasise that for every fact which is pleaded, there has to be

evidence, either oral or documentary, to substantiate the same. A bald

averment or mere statement by a defendant bereft of evidentiary

material to back up such averment/statement takes such defendant’s

case nowhere. While deciding a statutory appeal under Section 116A of

the Representation of the People Act, 1951 against an order of the

Gauhati High Court rejecting an Election Petition, this Court in Kalyan

Kumar Gogoi v Ashutosh Agnihotri, (2011) 2 SCC 532 commented

that the term ‘evidence’ is used colloquially in different senses:

“33. The word “evidence” is used in common parlance

in three different senses: (a) as equivalent to relevant,
(b) as equivalent to proof, and (c) as equivalent to the
material, on the basis of which courts come to a
conclusion about the existence or non-existence of
disputed facts. Though, in the definition of the word
“evidence” given in Section 3 of the Evidence Act one
finds only oral and documentary evidence, this word is
also used in phrases such as best evidence,
circumstantial evidence, corroborative evidence,
derivative evidence, direct evidence, documentary
evidence, hearsay evidence, indirect evidence, oral
evidence, original evidence, presumptive evidence,
 15

primary evidence, real evidence, secondary evidence,

substantive evidence, testimonial evidence, etc.”
(emphasis supplied)

25. However, we see in the facts at hand that there is no dispute qua

execution of the Agreement. The respondent claims/pleads coercion etc.

Arguendo, such was the case, what would assume relevance would be

the steps taken immediately thereafter by the respondent. Admittedly, no

steps whatsoever were taken, in law, by the respondent to resile from

the Agreement or to revoke it for at least half a decade i.e., from the date

of the Agreement till the suit came to be instituted. The respondent did

not even lodge appropriate legal proceedings and hence, it does not lie

in his mouth to take the plea that the Agreement was not signed

voluntarily. If such coercion etc. had actually occurred, the respondent

has no explanation to offer as to why he did not avail of any civil law

remedy (to have the Agreement nullified or voided) or take recourse to

criminal law (filing a complaint or registering a First Information Report).

What seems clear to us is that the panchayat tried to resolve the dispute

and that led to the Agreement between the parties.

26. It would be profitable to refer to some decisions, after looking at the

relevant provisions of the Transfer of Property Act, 1882 (hereinafter

referred to as the “Act”). Chapter IV of the Act is entitled “Of Mortgages

 16

Of Immovable Property And Charges” and the relevant Section is quoted

below:

“58. “‘Mortgage’, ‘mortgagor’, ‘mortgagee’,

‘mortgage-money’ and ‘mortgage-deed’” defined.—
(a) A mortgage is the transfer of an interest in specific
immoveable property for the purpose of securing the
payment of money advanced or to be advanced by
way of loan, an existing or future debt, or the
performance of an engagement which may give rise to
a pecuniary liability.
The transferor is called a mortgagor, the transferee a
mortgagee; the principal money and interest of which
payment is secured for the time being are called the
mortgage-money, and the instrument (if any), by which
the transfer is effected is called a mortgage-deed.
(b) Simple mortgage.—Where, without delivering
possession of the mortgaged property, the mortgagor
binds himself personally to pay the mortgage-money,
and agrees, expressly or impliedly, that, in the event of
his failing to pay according to his contract, the
mortgagee shall have a right to cause the mortgaged
property to be sold and the proceeds of sale to be
applied, so far as may be necessary, in payment of the
mortgage-money, the transaction is called a simple
mortgage and the mortgagee a simple mortgagee.
(c) Mortgage by conditional sale.—Where the
mortgagor ostensibly sells the mortgaged property—
on condition that on default of payment of the
mortgage-money on a certain date the sale shall
become absolute, or
on condition that on such payment being made the
sale shall become void, or
on condition that on such payment being made the
buyer shall transfer the property to the seller,
the transaction is called a mortgage by conditional
sale and the mortgagee a mortgagee by conditional
sale:
Provided that no such transaction shall be deemed to
be a mortgage, unless the condition is embodied in the
document which effects or purports to effect the sale.
(d) Usufructuary mortgage.—Where the mortgagor
delivers possession or expressly or by implication
 17

binds himself to deliver possession of the mortgaged

property to the mortgagee, and authorises him to
retain such possession until payment of the mortgage-
money, and to receive the rents and profits accruing
from the property or any part of such rents and profits
and to appropriate the same in lieu of interest, or in
payment of the mortgage-money, or partly in lieu of
interest or partly in payment of the mortgage-money,
the transaction is called an usufructuary mortgage and
the mortgagee an usufructuary mortgagee.
(e) English mortgage.—Where the mortgagor binds
himself to re-pay the mortgage-money on a certain
date, and transfers the mortgaged property absolutely
to the mortgagee, but subject to a proviso that he will
re-transfer it to the mortgagor upon payment of the
mortgage-money as agreed, the transaction is called
an English mortgage.
(f) Mortgage by deposit of title-deeds .—Where a
person in any of the following towns, namely, the towns
of Calcutta, Madras, and Bombay, and in any
other town which the State Government concerned
may, by notification in the Official Gazette, specify in
this behalf, delivers to a creditor or his agent
documents of title to immoveable property, with intent
to create a security thereon, the transaction is called a
mortgage by deposit of title-deeds.
(g) Anomalous mortgage.—A mortgage which is not a
simple mortgage, a mortgage by conditional sale, an
usufructuary mortgage, an English mortgage or a
mortgage by deposit of title-deeds within the meaning
of this section is called an anomalous mortgage. ”
(emphasis supplied)

27. In Syndicate Bank v Estate Officer & Manager, APIIC Ltd.,

(2007) 8 SCC 361, this Court held:

“28. The requisites of an equitable mortgage are : (i) a

debt; (ii) a deposit of title deeds; and (iii) an intention
that the deeds shall be security for the debt. The
existence of the first and third ingredients of the said
requisites is not in dispute. The territorial restrictions
 18

contained in the said provision also does not stand as

a bar in creating such a mortgage. The principal
question, which, therefore, requires consideration is as
to whether for satisfying the requirements of Section
58(f) of the Transfer of Property Act, it was necessary
to deposit documents showing complete title or good
title and whether all the documents of title to the
property were required to be deposited. A fortiori the
question which would arise for consideration is as to
whether in all such cases, the property should have
been acquired by reason of a registered document.
xxx
38. In K.J. Nathan v. S.V. Maruty Reddy [AIR 1965 SC
430: (1964) 6 SCR 727] this Court held: (AIR pp. 435-
36, para 10)
“10. The foregoing discussion may be
summarised thus: Under the Transfer of Property
Act a mortgage by deposit of title deeds is one of
the forms of mortgages whereunder there is a
transfer of interest in specific immovable property
for the purpose of securing payment of money
advanced or to be advanced by way of loan.
Therefore, such a mortgage of property takes
effect against a mortgage deed subsequently
executed and registered in respect of the same
property. The three requisites for such a mortgage
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 just like any other fact on presumptions
and on oral, documentary or circumstantial
evidence. There is no presumption of law that the
mere deposit of title deeds constitutes a
mortgage, for no such presumption has been laid
down either in the Evidence Act or in the Transfer
of Property Act. But a court may presume under
Section 114 of the Evidence Act that under certain
circumstances a loan and a deposit of title deeds
constitute a mortgage. But that is really an
inference as to the existence of one fact from the
existence of some other fact or facts. Nor the fact
that at the time the title deeds were deposited
 19

there was an intention to execute a mortgage

deed in itself negatives, or is inconsistent with, the
intention to create a mortgage by deposit of title
deeds to be in force till the mortgage deed was
executed. The decisions of English Courts making
a distinction between the debt preceding the
deposit and that following it can at best be only a
guide; but the said distinction itself cannot be
considered to be a rule of law for application
under all circumstances. 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 title deeds by the debtor to the creditor.
If the creditor was already in possession of the
title deeds, it would be hypertechnical to insist
upon the formality of the creditor delivering the
title deeds to the debtor and the debtor
redelivering them to the creditor. What would be
necessary in those circumstances is whether the
parties agreed to treat the documents in the
possession of the creditor or his agent as delivery
to him for the purpose of the transaction.”
The question which arose therein was that what would
be the extent of subject-matter of mortgage; the entire
property forming the subject-matter of mortgage or a
part thereof.”
(emphasis supplied)

28. In the interest of completeness, we may note that the Bench of 2

learned Judges in Syndicate Bank (supra) had referred to a larger

Bench, the question as to whether a property could be equitably

mortgaged by deposit of documents other than the title deeds or

registered title document. However, the 3-Judges Bench in Syndicate

Bank v Estate Officer and Manager (Recoveries), Andhra Pradesh

Industrial Infrastructure Corporation Limited, (2021) 3 SCC 736 was

 20

“of the opinion that the reference need not be answered in the peculiar

facts and circumstances of the case since in our opinion the State of

Andhra Pradesh and its successor viz. APIIC and Telangana Industrial

Infrastructure Ltd., are estopped from challenging the validity of the

mortgage.” In State of Haryana v Narvir Singh, (2014) 1 SCC 105, this

Court observed:

“11. A mortgage inter alia means transfer of interest in

the specific immovable property for the purpose of
securing the money advanced by way of loan. Section
17(1)(c) of the Registration 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
deeds in terms of Section 58(f) of the Transfer of
Property Act surely acknowledges the receipt and
transfer of 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 can be effected only by a registered instrument.
In the face of it, in our opinion, when the debtor
deposits with the creditor title deeds of the property for
the purpose of security, it becomes a mortgage in
terms of Section 58(f) 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 with 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
 21

document, however, shall require registration under

Section 17(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.
12. This Court had the occasion to consider this
question in Rachpal Mahraj v. Bhagwandas
Daruka [1950 SCC 195: AIR 1950 SC 272] and the
statement of law made therein supports the view we
have taken, which would be evident from the following
passage of the judgment: (AIR p. 273, para 4)
“4. A mortgage by deposit of title deeds is a form
of mortgage recognised by Section 58(f) of the TP
Act, which provides that it may be effected in
certain towns (including Calcutta) by a person
‘delivering to his creditor or his agent documents
of title to immovable property with intent to create
a security thereon’. That is to say, when the
debtor deposits with the creditor the title deeds of
his property with intent to create a security, the
law implies a contract between the parties to
create a mortgage, and no registered instrument
is required under Section 59 as in other forms of
mortgage. But if the parties choose to reduce the
contract to writing, the implication 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. As the deposit alone
is not intended to create the charge and the
document, which constitutes the bargain
regarding the security, is also necessary and
operates to create the charge in conjunction with
the deposit, it requires registration under Section
17 of the Registration Act, 1908, as a non-
testamentary instrument creating an interest in
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 to the creditor along with the title
deeds and yet may not be registrable.”
13. This Court while relying on the aforesaid judgment
in United Bank of India Ltd. v. Lekharam Sonaram &
 22

Co. [AIR 1965 SC 1591] reiterated as follows: (AIR p.

1593, para 7)
“7. … 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 security requires registration
under Section 17 of the Registration Act, 1908, as
a non-testamentary instrument creating an interest
in immovable property, where the value of such
property is one hundred rupees and upwards. If a
document of this character is not registered it
cannot be used in the evidence at all and the
transaction itself cannot be proved by oral
evidence either.”
xxx
14.2. But the question is whether a mortgage by
deposit of title deeds is required to be done by an
instrument at all. In our opinion, it may be effected in a
specified town by the debtor delivering to his creditor
documents of title to immovable property with the
intent to create a security thereon. No instrument is
required to be drawn for this purpose. However, the
parties may choose to have a memorandum prepared
only showing deposit of the title deeds. In such a case
also registration is not required. But in a case in which
the memorandum recorded in writing creates rights,
liabilities or extinguishes those, the same requires
registration.
14.3. In our opinion, the letter of the Finance
Commissioner would apply in cases where the
instrument of deposit of title deeds incorporates the
terms and conditions in addition to what flows from the
 23

mortgage by deposit of title deeds. But in that case

there has to be an instrument which is an integral part
of the transaction regarding the mortgage by deposit
of title deeds. A document merely recording a
transaction which is already concluded and which
does not create any rights and liabilities does not
require registration.
14.4. Nothing has been brought on record to show
existence of any instrument which has created or
extinguished any right or liability. In the case in hand,
the original deeds have just been deposited with the
Bank. In the face of it, we are of the opinion that the
charge of mortgage can be entered into revenue
record in respect of mortgage by deposit of the title
deeds and for that, an instrument of mortgage is not
necessary. A mortgage by deposit of the title deeds
further does not require registration. Hence, the
question of payment of registration fee and stamp duty
does not arise.
xxx
14.5. By way of abundant caution and at the cost of
repetition we may, however, observe that when the
borrower and the creditor choose to reduce the
contract into writing and if such a document is the sole
evidence of the terms between them, the document
shall form an integral part of the transaction and the
same shall require registration under Section 17 of the
Registration Act.”
(emphasis supplied)

29. We are of the opinion that the Single Judge has appreciated the law

correctly as far as the Agreement is concerned to hold it to be a

mortgage in view of Section 58(f) of the Act. We have read and re-read

the Agreement. We have also minutely considered the exposition of law

made in Narvir Singh (supra). We are of the opinion that the Agreement

only records what has happened and does not create/extinguish

rights/liabilities. It would, therefore, be covered by para 14.3 of Narvir

 24

Singh (supra), as highlighted hereinbefore. The reasoning of the

Division Bench proceeds as under:

“10. …The recitals of the document marked as Ex.P1

and duly extracted in the judgment does not contain
any, clear admission that a mortgage was created on
the property. The document proceeds as if the
appellant agreed to pay a sum of Rs.11 lakhs in full
and final settlement. There is nothing to show that a
mortgage was created. Even in the evidence given by
the respondent as P.W.1, it was his case that the
parent document was handed over only as a security.
Such being the evidence on record, the learned single
Judge was not correct in giving a finding that mortgage
was created and the title deed was given in
furtherance of the mortgage. We are therefore of the
view that there is no evidence adduced by the
respondent to show that a mortgage deed was
executed by the appellant and as such, he is entitled
to a mortgage decree. …”
(sic)

30. Quite evidently, the Division Bench did not account for Section

58(f) of the Act. Indubitably, the respondent pleaded threat and coercion

whilst executing/signing the Agreement, yet having accepted that he did

sign the same in his own hand, the burden was on him to prove such

threat/coercion. Looked at from any angle, the First Impugned Order

suffers from legal errors, and cannot withstand the scrutiny of law. At the

cost of repetition, it is to be stated that the Single Judge has rightly

considered the factual prism and focused on the core issue without

reference to facts which were irrelevant and not germane to the issue(s)

before her.
 25

31. The Second Impugned Order raises serious questions about how

and why the appellant went into slumber. If we may say so, a ‘fantastic’

plea was taken that the appellant had engaged a counsel only for the

delay condonation MP and not to argue the main appeal. Such a

contention is noted only for the purpose of outright rejection. This

‘fantastic’ plea has been dealt with correctly by the Division Bench and

no legal infirmity can be found therein.

32. Alas, only if things were as simple as they seemed! We have

already indicated that the First Impugned Order has to be set aside. In

order to do justice, quashing of the First Impugned Order would

necessarily mean that the effect of the Second Impugned Order would

get nullified, for all practical purposes, despite this Court being of the

view that on its own merits, the Second Impugned Order cannot be

faulted. However, for such legal misadventure resulting in wastage of

precious judicial time of the High Court, which could have been better

spent answering the call of justice raised by the teeming millions, we

impose costs of Rs.1,20,000/- (Rupees One Lakh Twenty Thousand) on

the appellant. Such cost shall be deposited within 6 weeks with the

Registry of the High Court, to be utilised as follows:

i. Rs.40,000 for juvenile welfare in a manner to be decided by the

Juvenile Justice Monitoring Committee;

 26

ii. Rs.40,000 for welfare of the Advocate-Clerks in a manner to be

decided by Hon’ble the Acting Chief Justice, and;

iii. Rs.40,000 for legal aid in a manner to be decided by the High

Court Legal Services Committee.

Receipt of deposit be filed in the Registry of this Court soon thereafter. In

case of non-compliance, the matter will be placed before us with

appropriate Office Report.

33. Accordingly, both Impugned Orders stand set aside. The Judgment

dated 01.04.2010 passed by the Single Judge stands restored with a

slight modification i.e., reduction in the rate of interest which has been

claimed by and allowed to the appellant. Interest at the rate of 36% p.a.

is on the excessive side and we pare down the same to 12% p.a. in the

interest of justice. Hence, simple interest will run only @ 12% p.a. from

24.06.2000 till the date of realisation.

34. The appeals are allowed in the above terms.

35. I.A. No.16204/2019 for exemption from filing Certified Copy of the

Impugned Judgment(s) is allowed. I.A. No.180367/2019 for permission

to file Additional Documents is allowed.

36. I.A. No.16203/2019 seeks condonation of delay in filing the

petitions. There is a delay of 589 days in filing the petition against the
 27

First Impugned Order. The petition against the Second Impugned Order

is also delayed by approximately 84 days. We are cognizant that the

appellant had moved the Division Bench seeking a fresh hearing of the

main appeal, which led to passing of the Second Impugned Order. In

Collector, Land Acquisition, Anantnag v Mst Katiji, (1987) 2 SCC

107, the Court noted that it had been adopting a justifiably liberal

approach in condoning delay and that “justice on merits” is to be

preferred as against what “scuttles a decision on merits”. Albeit, while

reversing an order of the High Court therein condoning delay, principles

to guide the consideration of an application for condonation of delay

were culled out in Esha Bhattacharjee v Managing Committee of

Raghunathpur Nafar Academy, (2013) 12 SCC 649. One of the factors

taken note of therein was that substantial justice is paramount 8.

37. In N L Abhyankar v Union of India, (1995) 1 MhLJ 503, a

Division Bench of the Bombay High Court at Nagpur considered, though

in the context of delay vis-à-vis Article 226 of the Constitution, the

decision in M/s Dehri Rohtas Light Railway Company Limited v

District Board, Bhojpur, (1992) 2 SCC 598, and held that “The real test

for sound exercise of discretion by the High Court in this regard is not

the physical running of time as such, but the test is whether by reason of

delay there is such negligence on the part of the petitioner, so as to infer

8
Para 21.3 of Esha Bhattacharjee (supra).
 28

that he has given up his claim or whether before the petitioner has

moved the Writ Court, the rights of the third parties have come into

being which should not be allowed to be disturbed unless there is

reasonable explanation for the delay.”9 The Bombay High Court’s

eloquent statement of the correct position in law found approval in

Municipal Council, Ahmednagar v Shah Hyder Beig, (2000) 2 SCC

48 and Mool Chandra v Union of India, 2024 SCC OnLine SC 1878.

38. In the wake of the authorities above-mentioned, taking a liberal

approach subserving the cause of justice, we condone the delay and

allow I.A. No.16203/2019, subject to payment of costs of Rs.20,000/-

(Rupees Twenty Thousand) by the appellant to the respondent.

…………………..........................J.
[HIMA KOHLI]

…………………..........................J.
[AHSANUDDIN AMANULLAH]
NEW DELHI
AUGUST 29, 2024

9
Emphasis supplied.