BEHRAM RASHID IRANI Vs. SORABJI RUSTAMJI ELAVIA

JUDGEMENT

(1.) In February 1907 the defendant deposited title-deeds of certain property in the Zilla of Nasik with the plaintiff. The plaintiff advanced to the defendant a sum of money and the present suit has been brought upon the footing of the said deposit which was made in the City of Bombay being an equitable mortgage of the Nasik property. I doubt much whether the Legislature ever intended to extend the doctrine of equitable mortgage by mere deposit of deeds in Bombay to lands lying anywhere outside Bombay. But as the section is worded I will not press that doubt here. Now, an equitable mortgage under Section 59 of the Transfer of Property Act needs three facts to be proved : (1871) 7 B.L.R.O.C. 55 a debt (1907) 9 Bom. L.R. Jour. 287 deposit of title-deeds, and (1886) I.L.R. 10 Bom. 634 an intention that the latter should be security for the former. I have often to notice in these Courts the growth of the doctrine of equitable mortgage which was very summarily in troduced by three judgments of Lord Thurlow given in rapid succession. The doctrine thus created amounted at that time to very much what the law now is, as I have just expressed it, although the learned Chancellor, I think, lent strongly to the supposed legal presumption arising from the fact of indebted ness and the contemporaneous or subsequent deposit of title-deeds. Then for the better part of a century, the Courts in England virtually adopted this presumption as a presumption of law and the need of proving intention almost disappear ed. Latterly, however, the legal doctrine in England veered in the opposite direction and the Courts began to insist more and more strongly upon the proof of intention as a question of fact, and that has been embodied in our own statute law and that is the law we have to administer.

(2.) Now, the difficulty in the present case arises out of the manner in which the plaintiff has sought to discharge the burden of proof upon this question of fact. He has offered in evidence a contemporaneous writing or agreement which does no doubt fully set forth the very clear intention of the defendant that the deposit of the title-deeds should be a security for the loan to be advanced on or before the signature of that agreement, and the paper goes on to bind the defendant to execute upon demand a proper legal mortgage of the property covered by the title-deeds deposited. It appears to me that having regard to the opening part of that document, it does in itself create a charge upon the property and is, viewed in that light, compulsorily registrable. I am not disposed here to go into the very nice questions which arise and have often been discussed in this and the other High "Courts upon contemporaneous writings of this kind, the question being usually whether these writings do in themselves create a mortgage or are merely subsequent records of it or anticipatory statements leading up to it. But I may observe speaking generally that no equitable mortgage is ever "created "by a writing. It is of the very essence of the equitable mortgage that it comes into being without any writing by the mere conjunction of certain facts. The inclination of my own mind has always been very strongly against any conclusion which implies that an equitable mortgage needs any such contemporaneous writing for its complete legal effect and consequences, and I think, rightly and logically Viewed, this writing can never be put higher than proof of the intention of parties. Where it is limited to an agreement to execute a legal mortgage, if called upon to do so, I should doubt myself whether it would ever be compulsorily registrable. But as 1 say that question is one of much nicety and opinions have differed widely upon it. I do not consider it necessary to go further into it here because in my opinion this agreement requires registration in itself, because it creates, very clearly creates, a charge upon the property to the extent of more than Rs. 100, and that being so, it is compulsorily registrable and cannot be received in evidence of any transaction relating to or affecting that immovable property. Now, if this document be excluded on this ground, as I think it must be, there remains no evidence whatever of intention to connect the deposit of title-deeds with the loan borrowed by the defendant from the plaintiff, and the mere fact that there was a subsequent or contemporaneous loan is not now in my opinion sufficient in law to warrant a presumption, apart from any other evidence that the contemporaneous or antecedent deposit of title-deeds was necessarily made as security for the loan. That is to say, on the question of fact there is absolutely no evidence, apart from this writing, which cannot be admitted to discharge the onus of proof which lies upon the plaintiff, and that is the ground to which I would prefer to restrict myself in reversing the decree of the lower appellate Court, restoring the decree of the Court of first instance and dismissing the plaintiff s suit with all costs. Macleod, J.

(3.) I agree with my brother Beaman that this appeal must be allowed, and that the decree of the lower Court dismissing the suit must be restored, the plaintiff paying the costs throughout. It has been held by the High Courts of Calcutta and Allahabad that in the case of deposit of title-deeds actually made in the towns mentioned in Section 59, the mortgage can be effected irrespective of the situation of the property to which the title-deeds refer. I do not think there is anything in the contention that in the case of an equitable mortgage, the property in the mofussil cannot be affected by a deposit of title-deeds in Bombay. In this case it appears to me that the plaintiff in order to prove his mortgage must rely on the document of the 9th of February 1907. That is the only evidence of the contract, and, as it requires registration, a contract of mortgage cannot be proved. Plaintiff, therefore, must fail.