CENTRAL BANK OF INDIA LTD Vs. NUSSERWANJI HBHARUCHA

JUDGEMENT

(1.) At the adjourned hearing of this suit evidence was led on behalf of the defendants to show what was the law of the Baroda State in respect of equitable mortgages. The evidence of Mr. Pranlal T. Munshi, a practising pleader of the Baroda High Court, Bhows that an Act, corresponding to our Transfer of Property Act, came into force in Baroda in Section 1957 (1900-01). Before that Act the Baroda High Court in one case at least had recognised an equitable mortgage by deposit of title deeds when the deeds were deposited in Baroda. This is proved by a judgment of the Baroda High Court reported in 4 Baroda Law Reports, at p. 212. Section 83 of Act II of Section 1957 of Baroda, which corresponds with Section 59 of our Transfer of Property Act, prescribes the conditions under which a mortgage transaction should be effected in writing and registered, In that section of the Baroda Act, before it was amended by Act IX of Section 1974, it was provided that a mortgage was to be by a registered deed, if the amount secured was more than Rs. 75, or, if the amount was legs than Rs. 75, either by such deed or by delivery of possession, except in respect of a simple mortgage, which is called a Ban mortgage in that Act. By Act IX of Section 1974 it was provided that if a mortgagor effected a mortgage transaction in the Baroda city by handing over documents which created a right over any immoveable property as security for any debt to a bank, firm or person in whose favour his Highness the Maharaja of Baroda had issued a notification, such transaction would not be void because it did not comply with the then existing provisions of Section 83 of the Baroda Act as regards registration or delivery of possession. Mr. Munshi produced a notification of the Baroda State Gazette (Exhibit 2) which showed that the manager of the Bank of Baroda was authorised to receive the security of an immoveable property by deposit of title deeds under Section 83 (3). That witness farther stated that, so far as he was aware, and could investigate, no notification of a like nature had been issued in favour of any other person by the Baroda State.

(2.) Having regard to this evidence it is clear that according to the law of the Baroda State an equitable mortgage can be created only in the city of Baroda and that too by depositing title deeds only with the manager of the Baroda Bank. According to that Act, if title deeds in respect of an immoveable property within the territories of His Highness the Maharaja of Baroda were deposited at any place outside Baroda city or even in Baroda city with any one other than the manager of the Bank of Baroda, the transaction would not be given effect to as an equitable mortgage.

(3.) This being the position of law at Baroda, and it being common ground that the property in question in this suit is situate at Itola, a town within the territories of His Highness the Maharaja of Baroda, the question arises whether the transaction in this suit can be enforced by a sale of the mortgaged property by this Court. It is common ground that the parties in this suit are domiciled in Bombay and the whole transaction took place in Bombay. The debt for which the defendants are liable arose and was repayable in Bombay and the security was given in Bombay. It is contended on behalf of the defendants that as the transaction by way of equitable mortgage was in respect of property within the Baroda State, the validity of the transaction should be decided according to the law at Baroda. In this connection it is pointed out that the English law on the subject is not directly applicable and the cases decided under the English law should be accepted with great caution. Reliance is further placed on the fact that even in British India a transaction by way of equitable mortgage is not generally recognised and it is only in the Presidency towns and the towns mentioned in Section 58(f) of the Transfer of Property Act, that such a transaction is allowed to be effected. Under these circumstances the general statements about the principles of equitable mortgages effected under the English law, where equitable mortgages are recognised all throughout England, should not be considered as applicable here, It is further contended that because in India the difference between legal and equitable estates is not recognised, a mortgage, whether it is legal or equitable, amounts to a transfer of an interest in immoveable property and does not stand on the same footing as in England where a legal mortgage is considered to be a transfer of interest in immoveable property, while an equitable mortgage is considered to be a contract with a liability to repay the loan out of the mortgaged security. It is pointed out that if this suit had been filed at Baroda, the Baroda Court would not have recognised the transaction by way of equitable mortgage and would not have enforced it. Ex parte Pollard (1838) 4 Deac. 27 and Ex parte Eolthausen. In re Scheibler (1874) L.R. 9 Ch. 22 were decided according to the law of bankruptcy, and, it is contended, have no bearing on the point in this suit. Even in those cases the learned Judges observed that in giving the reliefs to the claimants they were not doing anything which was contrary to the law of the place where the land was situate. According to Mr. Taraporewala's contention the question is, whether, by giving relief to the plaintiff in this suit, recognising the equitable mortgage and ordering the sale of the property, the Court would violate or interfere with the law of the Baroda State. The defendants contend that by ordering the sale this Court would be pronouncing a decision directly contrary to the express provisions of the Baroda Act. In this connection strong reliance is placed on the fact that the plaintiffs want a declaration in terms of prayer (b) to the plaint which, it is contended, would be in direct contravention of Section 83 (3) of the Baroda Act. It is also contended that if according to the Baroda law the plaintiffs have no charge on the property, as was clear from Section 83 (3), the Court could not give such a declaration in respect of title to an immoveable property situate in the territories of His Highness the Maharaja of Baroda and which would be directly against the law of that State. The two English cases referred to above are sought to be further distinguished on the ground that this is not a suit for specific performance of the agreement under which the defendants had agreed to give either a legal mortgage to the plaintiff or had agreed to do all such acts as were necessary to be done for completing the security in favour of the plaintiff.