IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT
THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN
WEDNESDAY, THE 17TH DAY OF NOVEMBER 2021 / 26TH KARTHIKA, 1943
WP(C) NO. 22744 OF 2020
PETITIONER:

PRADEEP KUMAR.P
AGED 56 YEARS
S/O. PARAMESWARAN PILLAI, BUSINESS, PUNNAMPARAMBIL
BUILDINGS, COURT JUNCTION PONKUNNAM P.O. KOTTAYAM 686
506.

BY ADVS.
R.SURENDRAN
KUM.S.MAYUKHA

RESPONDENTS:

1 THE STATE OF KERALA

REPRESENTED BY THE CHIEF SECRETARY TO GOVERNMENT
SECRETARIAT, THIRUVANANTHAPURAM 695 001.

2 THE PRINCIPAL SECRETARY TO GOVERNMENT OF KERALA,

TAXES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM 695
001.

3 THE PRINCIPAL SECRETARY TO GOVERNEMNT OF KERALA,

LOCAL SELF GOVERNMENT DEPARTMENT, SECRETARIAL,
THIRUVANANTHAPURAM 695 001.

4 THE RURAL DEVELOPMENT COMMISSIONER,

RURAL DEVELOPMENT DEPARTMENT, 4TH FLOOR, SWARRAJ
BHAVAN, NANTHANCODE, KOWDIAR, THIRUVANANTHAPURAM ,
KERALA 695003.

5 THE STATE LEVEL BANKER'S COMMITTE,

REPRESENTED BY ITS CONVENOR, SLBC CELL, CANARA BANK,
CIRCLE OFFICE, CANARA BANK BUILDING, M.G. ROAD,
THIRUVANANTHAPURAM 695 001.

6 THE SOUTH INDIAN BANK LTD.,

REPRESENTED BY THE CHIEF MANGER, SOUTH INDIA BANK LTD,
KANJIRAPPALLY BRANCH, KOTTAYAM DISTRICT, KERALA, STATE
WP(C) NO. 22744 OF 2020
2

686 507.

BY ADV SRI.S.EASWARAN S C

SMT.SURYA BINOY.SR.G.P

THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON

17.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C) NO. 22744 OF 2020
3

C.R.
JUDGMENT

The quest of the petitioner, who is

admittedly a borrower of certain loan facilities

from the 6th respondent - South Indian Bank

Limited (hereinafter referred to as 'the Bank'

for short), to build a defense against the

claims of the said Bank has led him to this

Court posing a very inventive question: namely,

whether Government of Kerala have unbridled

powers under Section 58(f) of the Transfer of

Property Act ('TP Act' for short), to declare

every part of the State being brought within its

ambit, for the purpose of creation of equitable

mortgage by deposit of Title Deeds.

2. The petitioner concedes that he had

taken a loan facility from the Bank and that he

and his mother had 'delivered' their title

documents to them as 'security' for a loan

WP(C) NO. 22744 OF 2020
4

facility availed of by a Firm called 'Sama

Rubbers', of which, he is the Managing Partner.

His contention, however, is that since the

documents were delivered at Kanjirapilly, it

cannot be construed to have created an

equitable mortgage over the property in

question because, as per the original

provisions of Section 58(f) of the 'T.P Act',

such deposit was permitted only in certain

specified towns, though admitting that the

statutory Scheme allows the State Government,

by notification, to bring within its ambit 'any

other town'.

3. The singular argument of the petitioner

is that Ext.P2 notification issued by the

Government of Kerala, invoking their power

under Section 58(f) of the 'TP Act', has been

done irregularly and without proper

application of mind because, it extends every

part of the territory of the State within the

WP(C) NO. 22744 OF 2020
5

purlieus of the said provision and that this

is egregiously improper, because when 'any

town' is brought within the umbra of the said

provision, the Government requires to satisfy

itself and to explain why it was so done.

4. The petitioner contends that,

therefore, the Bank cannot enforce the

security interest over the property in

question, under the provisions of the

Securitisation and Reconstruction of Financial

Assets and Enforcement of Securities Interest

Act ('the SARFAESI Act' for brevity), because

'delivery' of the title documents by him and

his mother at Kanjirapilly cannot partake the

character of an equitable mortgage over the

property covered by it; and consequently, that

they will have to attach it and bring to sale

as per Civil Law.

5. I have heard Sri.R.Surendran, learned

counsel for the petitioner; Sri.S.Easwaran,

WP(C) NO. 22744 OF 2020
6

learned Standing Counsel for the Bank and

Smt.Surya Binoy, learned Senior Government

Pleader appearing for the official respondents.

6. Sri.R.Surendran, learned counsel for

the petitioner, supplemented the afore

contentions of his client, relying on Article

243 B(1) of the Constitution of India saying

that the word 'town' in the 'TP Act' cannot be

construed to be the entire State; and

therefore, that while the Government of Kerala

issued Ext.P2, it ought to have explained and

recorded the specific requirements of extending

the ambit of Section 58(7) of the “T.P.Act” to

the whole State, based on cogent and actionable

cause and reasons. He asserted that, however,

this has not been done by the Government and

reiteratingly argued that Ext.P2 hence

improper and incompetent.

7. Sri.S.Easwaran, learned Standing

Counsel appearing for the Bank, made available

WP(C) NO. 22744 OF 2020
7

to this Court a very carefully curated

compilation of documents and materials covering

the field; and argued that, as per the original

provisions of the “TP Act”, as is stood in the

year 1882, certain towns, including Calcutta,

Madras, Bombay, Karachi, Rangoon, etc., were

specified to be ones where the deposit of title

documents would be construed as an equitable

mortgage, in distinction to a registered

instrument, which was the then mandatory norm.

He submitted that, the towns specified in the

original provision was obviously those wherein

commercial activities were being carried on a

large scale and that it is only such interest,

which governed the intent behind the said

provision.

8. Sri.S.Easwaran then showed me that the

'TP Act' was, thereafter, amended in the year

1929, stipulating that when a debtor delivers

to the creditor or his agent, documents of

WP(C) NO. 22744 OF 2020
8

movable property, with the intent to create a

security interest thereon, in the towns of

Calcutta, Madras, Bombay, Karachi, Rangoon,

Moulamein, Bassein and Akyab, or any other town

which the Governor General in Council may, by

notification in the Gazette of India, specify,

it shall be called a mortgage by deposit of

title deeds. He submitted that, therefore, even

going by the Scheme of the 'TP Act', as is

stood in the year 1882 or in the year 1929, it

was the Governor General in Council, who had

the discretion to decide the towns to which the

benefit under Section 58(f) of it would apply;

and that subsequent to the Constitution of

India being adopted, it is the Government

concerned which would obtain this Authority,

which is, in any case, unmistakable from the

manner in which the said provision is presently

worded.

9. Sri.S.Easwaran, thereafter, alleged

WP(C) NO. 22744 OF 2020
9

that the sole purpose of the petitioner behind

this writ petition is to wriggle out of his

obligations under the equitable mortgage

created on the properties by himself and his

mother, because he is aware that the only way

he can do so is to impugn Ext.P2 notififcation

of the Government and no other. He added that

loan was given to the petitioner, concededly,

in the year 2017 and he and his mother had

delivered the title documents with the intent

to create an equitable mortgage on the

properties covered by it on 15.12.2017,

followed by issuance of confirmatory letters,

making their intention to do so irrefragable.

He then explained that when the borrower

defaulted payment, the Bank issued a notice

under Section 13(2) of the SARFAESI Act on

23.06.2020, to which the petitioner caused a

reply, but which, pertinently, did not contain

any contention as against Ext.P2 notification,

WP(C) NO. 22744 OF 2020
10

but solely asserting that 'delivery of

documents' made by him and his mother cannot be

construed to be an equitable mortgage. He

predicated that, it is thus perspicuous that

the real intent of the petitioner is not to

challenge Ext.P2, but to collaterally obtain

force to his untenable assertion that delivery

of the title deeds of his property would not

lead to creation of an equitable mortgage over

it; and thus, prayed that this writ petition be

dismissed.

10. Smt.Surya Binoy, learned Senior

Government Pleader appearing for the official

respondents, submitted that the arguments of

the petitioner, as regards the

constitutionality and validity of Ext.P2,

cannot garner any merit, going by the well

established and recognized principles relating

to statutory interpretation, because Section

58(f) of the 'TP Act' vests the State

WP(C) NO. 22744 OF 2020
11

Government with the unequivocal competence to

notify any town, through a notification, to be

brought within the ambit of the said provision.

11. She added that the words “any other

town” in Section 58(f) of the “T.P Act” would

take into account any territory of the State;

and that, in any event of the matter, at least

three States in India have already issued

notifications akin to Ext.P2, bringing their

entire territory within the umbra of these

provisions.

12. As an adscititious argument, Smt.Surya

Binoy submitted that the contentions of the

petitioner edificed on the definition of the

words “any other towns” appearing in the

constitutional provisions, are not tenable

because going by Section 20 of the General

Clauses Act, 1897, the expression used in

“T.P.Act” can only have the same respective

meaning therein. She thus contented that the

WP(C) NO. 22744 OF 2020
12

afore words in the “T.P.Act” cannot be confined

to towns alone, but to every territory within

the State of Kerala. She, consequently prayed

that this writ petition be dismissed.

13. I have considered the afore submissions

and have also evaluated the various materials

produced on record by the rival parties,

particularly the thoughtfully compiled set of

papers made available by Sri.S.Easwaran.

14. There is no doubt – as is admitted -

that the original provision relating to

equitable mortgage in the “T.P.Act” was

contained in Section 59 thereof, which created

an exception to the Rule - that a mortgage can

be effected only through a registered document

– by mandating that when a debtor delivers

title documents to a creditor in the towns of

Calcutta, Madras, Bombay, Karachi, Rangoon,

Moulmein, Bassein and Akyab, with the intent to

create a security thereon, such transaction

WP(C) NO. 22744 OF 2020
13

shall not be held invalid.

15. The word 'equitable mortgage’ was not

used in the afore said provision, but, through

the subsequent amendment to the Act in the year

1929, Section 58(7) was introduced, which reads

as under:-

“Where a person in any of the

following towns, namely, the towns of
Calcutta, Madras, Bombay, Karachi,
Rangoon, Moulamein, Bassein and Akyab,
and in any other town which the Governor
General in Council may, by notification
in the Gazette of India, specify in this
behalf, delivers to a creditor or his
agent, documents of title to immovable
property, with intent to create a
security thereon, the transaction is
called a mortgage by deposit of title-
deeds.”

16. It is, therefore, ineluctable that, for

the first time, the word and concept of

‘equitable mortgage’ was expressly incorporated

into the “T.P Act”; and even going by the afore

extracted amendment, it was the Governor

WP(C) NO. 22744 OF 2020
14

General in Council, who was vested with the

unfettered power to decide the other areas to

be brought within its ambit.

17. That being so, I have also gone through

the various judgments and precedents placed

before me by the parties to this case, but I do

not see anywhere it having been specifically

declared as to the intent in the enumeration of

certain specified towns in Section 58(f) of

the “T.P. Act”, in exclusion to others, as it

stood in the years 1882 and 1929.

18. However, one certainly gets an insight

into this from the judgments in Jessie Moyle

Stewart vs. Bank of Upper India Ltd. [AIR 1916

Lah 1939]; Imperial Bank of India vs. U.Rai

Gyaw Thu and Co.Ltd. [1923(25)BOMLR 1279] and

Himalaya Bank Ltd. vs. F W Quarry and others

[(1895) ILR 17 All 252], that the singular

purpose and intent behind the original Section

58(f) of the “T.P Act” was to create an

WP(C) NO. 22744 OF 2020
15

opportunity for creditors and debtors to enter

into financial transactions, without the burden

of having to register the said arrangement.

This is apodictic because, as I have already

seen above, while the original provision did

not contain the word ‘equitable mortgage’, but

only sought to create a class of such

transactions - which would be valid even

without the rigor of registration, when the

Statute was amended in the year 1929, the word

and concept of 'equitable mortgage' was

expressly brought in, making it unambiguous

that the delivery by a debtor of his title

document, in certain specified towns, with the

intent to create mortgage over the property

covered by it in favour of the creditor, would

partake the character of an “equitable

mortgage”. The towns mentioned in the original

provision, without doubt, were those which were

the hubs of businesses and commercial

WP(C) NO. 22744 OF 2020
16

activities at that time.

19. Evidently, therefore, when the scope of

businesses expanded in due time and when ease

of doing commercial ventures required to be

freed from the fetters of territorial

limitations, Governments began to consider

inclusion of more and more towns and areas into

the fold of Section 58(f) of the “T.P.Act”; and

it is, therefore, irrefutable that what governs

their minds in doing so is only the financial

and commercial importance of such areas, which

have to be offered the flexibility under the

said provision.

20. In the afore perspective, no one can

argue against it that State of Kerala has

evolved rapidly in the last many years, both in

terms of size of businesses and of commercial

and industrial activities; and the Government,

therefore, in the year 2010, thought it fit to

bring its entire territory within the purlieus

WP(C) NO. 22744 OF 2020
17

of Section 58(f) of the “TP Act”, so as to

enable creation of equitable mortgages through

the deposit of title deeds at any place,

without having to follow the constraints of

registration.

21. That apart, I cannot find from Section

58(f) of the “T.P. Act” any fetter or bridle on

the right of the State Government concerned to

issue a notification bringing in its

territories into the fold of Section 58(f); and

therefore, the argument of Sri.R.Surendran,

that Government must justify such inclusion

through specific orders or proceedings, can

certainly be only seen to be farfetched. The

decision to bring in a particular territory or

area within the umbra of Section 58(f) of the

“T.P.Act” is essentially a policy and financial

decision and if the Government was of the

considered opinion that entire State of Kerala

- as in the case of States like Hariyana,

WP(C) NO. 22744 OF 2020
18

Punjab and Orissa - require to be notified, so

as to enable Banks and other Financial

Institutions to enjoy the fiscal flexibility

offered by Section 58(f) of the “T.P. Act”,

this Court cannot find fault with it or with

such mentation, which led to Ext.P2.

22. In the absence of the petitioner

showing me any fetter on the power of the

Government in exercising its authority under

Section 58(f) of the “TP Act” with respect to

any territory of the State, I fail to fathom

how an argument, as has been now impelled by

Sri.R.Surendran, can never find imprimatur of

any Court.

23. In the afore scenario, the contentions

of the petitioner edificed on Article 243 B(1)

of the Constitution of India would also plummet

into complete insignificance because what

Section 58(f) of the “T.P.Act” effectively does

is to empower the Government to bring in any

WP(C) NO. 22744 OF 2020
19

area within its scope, based on its assessment

of the requirements of the times and the

necessities of the business community.

Therefore, the distinction between “towns”,

“cities” and “panchayats”, as has now been

tried to be brought in by Sri.R.Surendran would

be of no relevance to the issues at hand,

because, as I have already seen above, the

words “any other town” does not indicate the

territorial limits, as if it is under the

delimitation processes, but only the areas to

which Section 58(f) of the “T.P.Act” would

apply.

24. The above is unmistakable because, it

is certainly within competence of the

Government to even take out portions of a town

or a city or a panchayat and notify it

specifically under Section 58(f) of the “T.P.

Act”, so as to cover only that area, and this

would obtain favour in law as long as it is

WP(C) NO. 22744 OF 2020
20

hypostasised on an assessment of the financial

requirements and ease of business requisites.

25. That being so said, as rightly stated

by Sri.S.Easwaran, the only reason why the

petitioner has sought to challenge Ext.P2 –

which was issued as early as in the year 2010 –

is because action has now been taken by the

Bank against him under the SARFAESI Act. The

method which he has devised to wriggle out of

his obligations under the loan facility is to

contend that his property is not covered by an

equitable mortgage because its title documents

were not delivered by him in a “town” notified

under Section 58(f) of the “T.P. Act”, prior to

Ext.P2 notification. It is unnecessary to say

it again that this argument can obtain no legs

to stand on for the reasons above and

additionally because, as is admitted, when

certain towns were originally included in

Section 58(f) of the “T.P.Act”, no orders or

WP(C) NO. 22744 OF 2020
21

proceedings were issued to justify it and hence

if the submissions of Sri.R.Surendran are to be

accepted, then such inclusion would also have

to be seen as incompetent. However,

pertinently, the petitioner accepts it.

26. Indubitably, the petitioner is engaging

in brinkmanship when faced with recovery

action. Of course, the Bank contends that the

petitioner and his mother had given specific

confirmatory letters to the effect that they

have executed the “equitable mortgages”, but I

do not think that this Court will be justified

in taking cognizance of the same and speaking

upon it in this judgment, since, concededly, a

Securitisation Application numbered as

S.A.No.233/2020-has been filed by the

petitioner before the jurisdictional Debts

Recovery Tribunal, assailing the alleged

mortgage even on other grounds.

27. I, therefore, leave all these

WP(C) NO. 22744 OF 2020
22

contentions to be pursued by the parties before

the Debts Recovery Tribunal or such other

Authority as they may be advised.

28. As far as this writ petition is

concerned, it is luculent from the conspectus

of my afore observations that challenge of the

petitioner against the notification of the

Government, bringing the entire State of Kerala

within the beneficial embrace of Section 58(f)

of the “T.P.Act”, cannot be sustained. I am

certain that Government has acted correctly and

that they were not obligated or enjoined by its

provisions to explain why a particular

territory has been either brought in, or

excluded, from the provisions of Section 58(f)

of the “T.P.Act”; and that these decisions are

within the policy decision making realm, into

which this Court seldom and rarely enters.

In the afore circumstances, leaving open

all other contentions of the rival parties, I

WP(C) NO. 22744 OF 2020
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dismiss this writ petition, confirming Ext.P2

notification of the Government.

Sd/-
DEVAN RAMACHANDRAN
JUDGE
SAS/17/11/2021
WP(C) NO. 22744 OF 2020
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APPENDIX OF WP(C) 22744/2020

PETITIONER'S EXHIBITS

EXHIBIT P1 TRUE COPY OF REGISTRATION CERTIFICATE DATED

4.2.2013 ISSUED BY THE REGISTRAR OF FIRMS,
KERALA.

EXHIBIT P2 TRUE COPY OF NOTIFICATION ISSUED BY THE

GOVERNMENT OF KERALA AS SRO NO. 1002/2010
DATED 2.11.2010 AND PUBLISHED IN KERALA
GAZETTE EXTRAORDINARY VOL. 55 NO. 2421 DATED
2.11.2010.