Supreme Court: No Fees Needed for Mortgage by Deposit of Title-Deeds

The Supreme Court upheld that registration and payment of fees are not required for a mortgage by deposit of title-deeds, affirming the High Court's decision. However, the Court remitted the issue of property location back to the High Court for further consideration in light of specified towns under the Transfer of Property Act.

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Issues Involved:
1. Whether the charge of mortgage can be entered in the revenue record in respect of a mortgage effected by deposit of title-deeds without its registration and payment of registration fee and stamp duty.
2. Whether the properties mortgaged by deposit of title-deeds are situated in the towns specified u/s 58(f) of the Transfer of Property Act.

Summary:

Issue 1: Registration and Payment of Fees for Mortgage by Deposit of Title-Deeds

The Petitioners challenged the High Court's order directing entry of charge in the revenue records based on a mortgage created by deposit of title-deeds. The Respondents argued that the instrument of deposit of title-deeds is compulsorily registrable u/s 17(1)(c) of the Registration Act, 1908, and requires payment of registration fee and stamp duty. The High Court negated this, stating that an equitable mortgage is created by the deposit of title-deeds and not through any written instrument. The Supreme Court upheld this view, emphasizing that no registered instrument is required u/s 59 of the Transfer of Property Act for a mortgage by deposit of title-deeds. The Court referred to precedents, including Rachpal v. Bhagwandas and United Bank of India v. Lekharam Sonaram and Co., to support this interpretation. The Court concluded that the charge of mortgage can be entered into revenue records without registration and payment of fees, provided no additional terms and conditions are incorporated in a memorandum.

Issue 2: Location of Properties for Mortgage by Deposit of Title-Deeds

In a separate appeal, the Appellants contended that the properties mortgaged by deposit of title-deeds were not situated in towns specified u/s 58(f) of the Transfer of Property Act. They referred to a notification specifying certain towns for this purpose. The Supreme Court noted that this aspect was not considered by the High Court and remitted the matter back for fresh consideration in light of the specified towns.

Conclusion:

The Supreme Court dismissed the appeal regarding the necessity of registration and payment of fees for a mortgage by deposit of title-deeds, affirming the High Court's judgment. However, it allowed the appeal concerning the location of the properties and remitted the matter back to the High Court for fresh consideration.

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