ARVINDER KAUR Vs. K C MANCHANDA

JUDGEMENT

(1.) Aqueous details evaporated, the dehydrated facts are these. Respondent Nos. 2 to 4 (in this appeal) who constitute a partnership firm styled as Bawa Cycle Stores Amritsar, during the course of their business dealings with the first respondent, incurred a liability to pay a sum of Rs. 62,549/- to him. On being required by the first respondent to furnish security for this liability, the second respondent effected a mortgage by deposit of title deeds of his double storeyed house for a consideration of Rs. 29,000/-. He also executed three pronotes of the total value of Rs. 25,000/- in favour of the first respondent. The latter obtained a money decree for Rs. 25,000/- against the debtors and in execution of the same he got attached the house, referred to above. The appellant came forward with objections under Order XXI, Rule 58 of the Code of Civil Procedure (hereinafter referred to as the Code) against this attachment pleading inter alia that she had purchased the attached property on August 4, 1965 by means of a registered sale deed (Exhibit D-3) for a consideration of Rs. 18,000/-. Her objection prevailed and the attachment of the house was withdrawn. This necessitated the filing of a suit under order XXI, Rule 63 of the Code by the first respondent for a declaration that the house in dispute was liable to attachment and sale in execution of the decree in his favour, and in the alternative for the grant of a declaration that an equitable mortgage had been created in respect of the property, entitling him to claim the property in preference to the appellant. The trial Court, however, upheld the claim of the appellant holding that she was a bona fide purchaser of the property without notice of the equitable mortgage and hence the property was not liable to attachment. The suit filed by the first respondent, thus failed in the Court.

(2.) Regular First Appeal No. 46 of 1968 was filed by the first respondent in this Court and our learned brother R.N. Mittal, J., accepted the appeal partly to the extent that a declaration was issued in his favour to the effect that an equitable mortgage had been created to cover an amount of Rs. 29,000/-. The learned Judge, however, dismissed the suit in so far as the prayer for issue of a declaration that the property was liable to attachment and sale in execution of the decree, was concerned. The present appeal under Clause X of the Letters Patent has been launched by the vendee of the property, with a view to impugn the relief partly granted by the learned Single Judge in favour of the first respondent.

(3.) The only submission made by the learned counsel for the appellant is in regard to the finding about the existence of the equitable mortgage in the present case. It is contended that no equitable mortgage could have been created in Punjab earlier to August 28, 1975. The contention now raised is in contradiction to the observation made by the learned Single Judge that the fact that equitable mortgage could be created in Punjab was not disputed before him. The counsel, however, urged that this is a pure question of law which may be examined. He has referred to the provisions of Section 58(f) of the Transfer of Property Act (hereinafter called the Act) wherein it is provided that a mortgage by deposit of title deeds was permissible only in the towns of Calcutta, Madras and Bombay, and in any other town specified by the State Government by issue of a notification in the official Gazette. It is further pointed out that it was on August 28, 1975 that a notification was issued by the Punjab Government by which the provisions of Section 58(f) of the Act were extended to the State of Punjab, and that the mortgage in the present case having been effected earlier to this date, was not valid. We are not inclined to accept the above contention, as the same is opposed to the established principles of law in regard to the creation of a mortgage by deposit of title deeds. The institution of equitable mortgage is of ancient origin even in India and such mortgages by deposit of title deeds have been accepted in this country as equivalent to simple mortgages, particularly after the Privy Council decision in Varden Seth v. Luckpathy, 1862 9 MooIndApp 307. It has also been held consistently that equitable mortgages are permissible even in places to which the Act has not been extended. Nearer home, mortgage by deposit of title deeds has always been held to be valid in Punjab and if any authority is required on this proposition, reference may be made to Mulla's Transfer of Property Act, Sixth Edition Page. 394. In Firm Moti Ram Mohan Lal v. Bharat National Bank Limited, Delhi,1921 AIR(Lah) 253 the argument that equitable mortgage was not valid in Punjab was disposed of by a brief reference to two earlier decisions of the Punjab Court. It is obvious, therefore, that the promulgation of the Notification dated August 28, 1975, extending the provisions of Section 58(f) of the Act to Punjab, is nothing but an official recognition of the legal authorisation already in existence since long.