Unregistered agreement to sell cannot create a mortgage; a later valid security may prevail over an undisclosed equitable claim.

An unregistered agreement to sell does not, by itself, create any interest, mortgage, or charge over immovable property under the transfer of property framework. The surrounding transaction may still support only an equitable claim if the facts show a clear intention to create security, but such a claim does not arise automatically from the agreement alone. Priority between competing securities depends on the nature of the interest created, disclosure, notice, and the validity of the later security. On the stated facts, the later bank's valid security based on title deeds prevailed, and the earlier bank's asserted equitable mortgage could not defeat that priority.

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Issues: (i) Whether an unregistered agreement to sell, by itself, creates any mortgage or charge over immovable property. (ii) Whether, on the facts, the later bank's security had priority over the earlier bank's asserted equitable mortgage.

Issue (i): Whether an unregistered agreement to sell, by itself, creates any mortgage or charge over immovable property.

Analysis: A contract for sale does not, by itself, create any interest in or charge on immovable property. A mortgage under the Transfer of Property Act requires transfer of an interest in specific immovable property, while a charge arises only where the property is made security for payment though the transaction does not amount to a mortgage. The registration framework and the property statutes relied upon by the Court underscore that an unregistered agreement to sell cannot be equated with title or conveyance, though the surrounding facts may still show an intention to create security in equity.

Conclusion: An unregistered agreement to sell did not, by itself, create a legal mortgage, but the surrounding transaction could support only an equitable claim or charge if intention and circumstances so warranted.

Issue (ii): Whether, on the facts, the later bank's security had priority over the earlier bank's asserted equitable mortgage.

Analysis: The Court distinguished between an equitable mortgage recognised in equity and a legal mortgage by deposit of title deeds. It held that the earlier bank's transaction, based on unregistered agreements to sell, did not displace the later bank's security where the later bank had obtained the operative title document and the earlier arrangement had not been properly disclosed. Applying the principles governing priority, notice, and the statutory scheme of mortgage and charge, the Court held that equity could not defeat the legal priority emerging from the later valid security.

Conclusion: The later bank's security was entitled to prevail and the earlier bank's asserted equitable mortgage could not be enforced against the later bank's recovery proceeds.

Final Conclusion: The impugned judgment was unsustainable, and the appellant was held entitled to the sale proceeds in preference to the respondent bank's undisclosed equitable claim.

Ratio Decidendi: An unregistered agreement to sell does not create an interest in immovable property, and an asserted equitable mortgage or charge, unless properly disclosed and legally enforceable against subsequent claimants, cannot defeat a later valid security supported by title deeds and priority in law.

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