Holding

The agreement and deposit of title deeds constituted an equitable mortgage under Section 58(f) of the Transfer of Property Act, and the High Court's finding to the contrary was set aside.

Summary

The appellant advanced a Rs.10 lakh loan to the respondent, securing it by two registered mortgages and four promissory notes. When the respondent defaulted, he handed over the title deeds of a Chennai property as security under a later agreement, promising to register a sale deed and repay a balance of Rs.2 lakh. The Single Judge held that the agreement created an equitable mortgage by deposit of title deeds under Section 58(f) of the Transfer of Property Act and decreed a mortgage decree. The Division Bench of the High Court reversed this, finding no mortgage, but the Supreme Court reinstated the Single Judge's view, noting that the agreement and the deposit satisfied the requisites of an equitable mortgage and that the respondent offered no evidence of coercion. The Court also modified the interest rate from 36% to 12% per annum and imposed costs. Consequently, the appeals were allowed, setting aside the High Court orders and restoring the original decree.

Issues considered

Whether the agreement and deposit of title deeds created an equitable mortgage under Section 58(f) of the Transfer of Property Act, 1882.
Whether the mortgage was redeemed at any point before the suit.
Whether the High Court Division Bench erred in holding that the plaint did not establish a valid mortgage.
Whether the respondent's claim of coercion was substantiated by evidence.
Whether the interest rate of 36% per annum was permissible.

Legislation cited

Registration Act, 1908s. 17
Transfer of Property Act, 1882s. 58(f), s. 59

Subjects

MortgageMortgage deedEquitable mortgage by depositing title deedsLoanRedemption of the mortgageMortgage decreePromissory notesRegistrationDelay condonationLiberal approachPleadingsEvidence

Judgment

[2024] 8 S.C.R. 1002 : 2024 INSC 640

A.B. Govardhan
v.
P. Ragothaman
(Civil Appeal No(s). 9975-9976 of 2024)
29 August 2024
[Hima Kohli and Ahsanuddin Amanullah,* JJ.]

Issue for Consideration
Whether the respondent-defendant by way of the agreement agreed
to create equitable mortgage by depositing the title deeds for the
loan obtained by him from the appellant-plaintiff; whether there
was redemption of the mortgage; whether the Single Judge rightly
held the agreement to be a mortgage in view of Section 58(f) of
the Transfer of Property Act, 1882.

Headnotes†
Transfer of Property Act, 1882 – s.58 – Mortgage – Loan
obtained by the respondent-defendant from the appellant-
plaintiff – Under the agreement in question, the respondent
produced title document of his property as security towards
debt and agreed to register the Sale Deed as and when
demanded – However, later neither the respondent executed
the Sale Deed nor paid the balance sum – Agreement, if was a
mortgage – Whether the respondent by way of the agreement
created a equitable mortgage by deposit of title deeds:
Held: Yes – There was no redemption of this mortgage – Division
Bench erred in holding that the plaint averments did not conclude
that there was a valid mortgage entitling the appellant-plaintiff
to sue for a mortgage decree – Single Judge correctly held the
agreement to be a mortgage in view of s.58(f) of the 1882 Act –
Respondent admitted execution of the agreement (Exhibit P-1)
however, claimed coercion but led no evidence to support this
plea – Further, the agreement only recorded what had happened
and did not create/extinguish rights/liabilities and therefore covered
by para 14.3 of Narvir Singh and did not require registration –
Impugned orders set aside – Judgment of the Single Judge
restored with modification. [Paras 22, 29, 33]
Pleadings – Evidence – Every fact pleaded has to be
substantiated:
* Author
[2024] 8 S.C.R. 1003

A.B. Govardhan v. P. Ragothaman

Held: For every pleaded fact, there has to be evidence, oral or
documentary, to substantiate the same – A bald averment or
mere statement by a defendant bereft of evidentiary material to
back up such averment/statement takes such defendant’s case
nowhere. [Para 24]
Delay – Condonation – Liberal approach – Discussed.

Case Law Cited
State of Haryana v Narvir Singh [2013] 9 SCR 949 : (2014) 1
SCC 105 – relied on.
Kalyan Kumar Gogoi v Ashutosh Agnihotri [2011] 1 SCR 796 :
(2011) 2 SCC 532; Syndicate Bank v Estate Officer & Manager,
APIIC Ltd. [2007] 9 SCR 619 : (2007) 8 SCC 361; Syndicate
Bank v Estate Officer and Manager (Recoveries), Andhra
Pradesh Industrial Infrastructure Corporation Limited (2021) 3
SCC 736; Collector, Land Acquisition, Anantnag v. Mst Katiji
[1987] 2 SCR 387 : (1987) 2 SCC 107; Esha Bhattacharjee v.
Managing Committee of Raghunathpur Nafar Academy [2013] 9
SCR 782 : (2013) 12 SCC 649; N L Abhyankar v Union of India
(1995) 1 MhLJ 503; M/s Dehri Rohtas Light Railway Company
Limited v District Board, Bhojpur [1992] 2 SCR 155 : (1992) 2 SCC
598; Municipal Council, Ahmednagar v Shah Hyder Beig [1999]
Supp. 5 SCR 197 : (2000) 2 SCC 48; Mool Chandra v Union of
India, 2024 SCC OnLine SC 1878 – referred to.

List of Acts
Transfer of Property Act, 1882.

List of Keywords
Mortgage; Mortgage deed; Equitable mortgage by depositing title
deeds; Loan; Redemption of the mortgage; Mortgage decree;
Promissory notes; Registration; Delay condonation; Liberal
approach; Pleadings; Evidence.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 9975-9976 of
2024
From the Judgment and Order dated 12.07.2018 and 22.02.2017 of
the High Court of Judicature at Madras in CMP No. 10107 of 2017
and OSA No. 189 of 2011 respectively
1004 [2024] 8 S.C.R.

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Appearances for Parties
Narendra Kumar, V. Balaji, Atul Sharma, Asaithambi MSM, R. Mohan,
A. Krishna Kumar, C. Kannan, Rakesh K. Sharma, Advs. for the
Appellant.
V Prabhakar, Sr. Adv., S. Rajappa, Ms. Jyoti Singh, R Gowrishankar,
N J Ramchandar, Ms. Jyoti Parasher, Rakesh Ranjan, Advs. for the
Respondent.
Judgment / Order of the Supreme Court
Judgment
Ahsanuddin Amanullah, J.
Heard Mr. Narendra Kumar, learned counsel for the appellant and
Mr. V. Prabhakar, learned Senior counsel for the respondent.
2. Leave granted. The pending applications shall be dealt with in the
final pages of this judgment.
3. The present appeals germinate from the:
3.1. Final Judgment and Order dated 22.02.2017 (hereinafter referred
to as the “First Impugned Order”)1 passed by a Division Bench
of the High Court of Judicature at Madras (hereinafter referred
to as the “High Court”) in Original Side Appeal2 No.189 of 2011,
whereby the appeal filed by the respondent was allowed and
Judgment dated 01.04.2010 passed by a Single Judge of the
High Court in Civil Suit No.701 of 2005 (hereinafter referred to
as the “suit”) was set aside.
3.2. Order dated 12.07.2018 (hereinafter referred to as the “Second
Impugned Order”) passed by the same Division Bench, whereby
Civil Miscellaneous Petition3 No.10107 of 2017 in OSA No.189
of 2011 filed by the appellant seeking to “set aside” the First
Impugned Order and restore the main appeal for fresh hearing,
was dismissed.

1 2017 SCC OnLine Mad 11918 | (2017) 3 CTC 777 | (2017) 3 Mad LJ 522 | (2017) 4 LW 421.
2 Hereinafter abbreviated to “OSA”.
3 Hereinafter abbreviated to “CMP”.
[2024] 8 S.C.R. 1005

A.B. Govardhan v. P. Ragothaman

BRIEF FACTS:
4. The respondent (defendant in the suit) and his wife are engaged in
business of building materials. As per the appellant (plaintiff in the
suit), the respondent approached him in February, 1995 seeking a
loan for his business. The appellant advanced a loan of Rs.10,00,000/-
(Rupees Ten Lakhs) to the respondent on the security of his properties.
5. Since the respondent could not pay Stamp Duty on the Mortgage
Deed, it was agreed between the parties that the said sum be split
into two registered mortgages and the balance in four promissory
notes. Accordingly, the respondent executed the following:
i) Mortgage Deed dated 16.03.1995 for Rs.1,00,000/- (Rupees
One Lakh) agreeing to repay the same together with interest
at 36% per annum;4
ii) Mortgage Deed dated 17.04.1995 for Rs.50,000/- (Rupees Fifty
Thousand) agreeing to repay the same together with interest
at 36% p.a., and;
iii) Four promissory notes for the balance amount of Rs.8,50,000/-
(Rupees Eight Lakhs Fifty Thousand).
6. Besides the two mortgages supra, the respondent borrowed the
remaining Rs.8,50,000/- (Rupees Eight Lakhs Fifty Thousand) in
four promissory notes on different dates. Since there was default in
payment of interest, the appellant demanded repayment of the amount
due under the four promissory notes. The respondent thereupon, in
various panchayats, promised to repay the amounts. Ultimately, in the
panchayat dated 24.06.2000, the respondent produced title document
of his property as security towards debt under the four promissory
notes, which has been noted in the Agreement dated 24.06.2000
(hereinafter referred to as the “Agreement”). This Agreement, in
essence, is the root of the instant lis.
7. The Agreement notes that the respondent owed a total amount
of Rs.11,00,000/- (Rupees Eleven Lakhs) to the appellant and in
settlement thereof, the respondent handed over the title deeds
pertaining to the property situated at No.33, Avvai Thirunagar,
Chennai-600111, admeasuring 1300 square feet of land together with

4 Hereinafter abbreviated to “p.a.”.
1006 [2024] 8 S.C.R.

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700 square feet building (hereinafter referred to as the “schedule
property”), which was valued at Rs.9,00,000/- (Rupees Nine Lakhs).
Per the Agreement, the respondent agreed to register the Sale
Deed as and when demanded. Further, for re-paying the balance
sum of Rs.2,00,000/- (Rupees Two Lakhs), it was agreed that the
respondent will redeem the mortgaged property from the appellant
and re-mortgage it elsewhere.
8. After the Agreement was entered into between the parties, the
promissory notes were returned which were torn-out in the panchayat.
Thereafter, the respondent neither executed a Sale Deed nor paid
the balance sum of Rs.2,00,000/- (Rupees Two Lakhs). As a result,
the appellant-plaintiff, filed the suit before the High Court, praying for:
“(I) granting a usual preliminary mortgage decree of the
Schedule mentioned property against the defendant for
the recovery of Rs.23,96,000/- together with interest
at 36% p.a. on Rs.11,00,000/- till the date of realization;
And pass a final decree thereafter for sale of the Mortgaged
property;
(II) for costs of this suit; and for such other equitable reliefs
as may deem fit and proper in the circumstances of the
case and render justice.”
(sic)
9. The Single Judge, after perusing the evidence on record and hearing
the parties, passed judgment dated 01.04.2010 holding that the
respondent-defendant had agreed to “create equitable mortgage by
depositing the title deeds”. Finding thus, the Single Judge decreed
the suit. Aggrieved, the respondent filed an intra-court appeal being
OSA No.189 of 2011 along with Miscellaneous Petition5 No.1 of 2011,
which was an application seeking condonation of delay of 176 days.
The appellant through his advocate, Mr. V. Manohar received notice
and filed a counter-affidavit opposing the said condonation of delay
application. On 18.04.2011, the Division Bench was pleased to
condone the delay, subject to payment of cost of Rs.1,000/- (Rupees
One Thousand) to the appellant.

5 Hereinafter abbreviated to “MP”.
[2024] 8 S.C.R. 1007

A.B. Govardhan v. P. Ragothaman

10. The Division Bench vide the First Impugned Order allowed the
appeal, holding that the appellant had failed to prove that there was
a mortgage executed by the respondent. It is to be noted that none
appeared for the appellant in the appeal. Subsequently, the appellant
filed CMP No.10107 of 2017 in OSA No.189 of 2011, praying therein
to “set aside” the First Impugned Order and for restoration of the main
appeal for fresh hearing. The appellant contended that his erstwhile
counsel (Mr. V. Manohar) was authorized only to appear in the MP
filed to condone the delay [MP No.1 of 2011] and that there was
no notice issued to him after registering of the appeal. The Division
Bench vide the Second Impugned Order dismissed the CMP.
SUBMISSIONS BY THE APPELLANT-PLAINTIFF:
11. At the outset, the learned counsel for the appellant submitted that
the Division Bench of the High Court gravely erred in holding that the
plaint averments were not sufficient to conclude that there was a valid
mortgage entitling him to sue for a mortgage decree. It was submitted
that the plaint, read as a whole, alongwith the Agreement, the Proof
Affidavits and evidence of PW-1/appellant and DW1/respondent
clearly evince the fact that a loan was secured by the respondent
by mortgaging the schedule property. The amount in the Agreement
pertains to loan transactions for which the mortgage was created by
the Respondent. It was submitted that in such circumstances, the
findings in the First Impugned Order are highly erroneous.
12. It was submitted by learned counsel that the Single Judge has
rightly arrived at the conclusion that the present case is one where
the respondent agreed to create a mortgage by depositing the title
deed. There was an actionable debt and the respondent had fully
intended that the deed ought to be the security for the debt. The
Single Judge had also noted that the respondent in his evidence as
DW1, had agreed to deposit the title deed to create an “equitable
mortgage” for the loan amount obtained by him from the appellant.
Thus, the Single Judge had rightly decreed the appellant’s suit and
passed preliminary decree of mortgage.
13. It was further submitted that the Division Bench in the First Impugned
Order had erred in holding that there was no stipulation to pay
interest in the Agreement and that therefore the rate of interest as
granted by the Single Judge could not have been so granted. It was
submitted that various loans were advanced by the appellant to the
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respondent categorically stipulating interest at the rate of 36% p.a.
on repayment. Once this contractual rate of interest was agreed upon
by the parties, there was no scope for the Division Bench to state
that there was no stipulation to pay interest in the Agreement. The
Agreement had to be read in conjunction with various promissory
notes and documents evidencing the mortgage and repayment of
the loan with interest. Learned counsel contended that the Division
Bench erred in holding that there was no prayer for grant of a
personal decree against the respondent. It was submitted that the
prayer clause of the plaint would show to the contrary.
14. On the Second Impugned Order, learned counsel for the appellant
submitted that the Division Bench went wrong in not appreciating
that the appellant had never authorized his counsel to represent
him in the OSA and his vakalatnama was confined to the MP filed
by the respondent seeking condonation of delay of 176 days. The
MP was allowed by the Division Bench vide order dated 18.04.2011.
Thereafter, the appellant, claims learned counsel, was not served with
any notice in the OSA. The appellant submits that he was neither
informed by his counsel, Mr. V. Manohar or by the Registry of the
High Court about the status of the appeal.
15. It was further submitted that the Division Bench gravely erred in
holding that the vakalatnama was given to Mr. V. Manohar for
appearing in the MP for condonation of delay, the main appeal as
also this Court. It was submitted that Mr. V. Manohar, counsel, was
practicing only in the High Court. There was no question of the
appellant authorizing any counsel for taking up the case in this Court
as and when a case would come up. It was urged that a blanket
printed statement on a vakalatnama can never constitute the intention
of a litigant authorizing his/her/their counsel to represent the litigant
in question in all courts and all proceedings.
16. Learned counsel contended that the appellant’s advocate Mr.
Sukumar, who was appearing for the appellant in the Court at
Tiruvannamalai, called the appellant and informed him that a judgment
showing the appellant’s name was published in one of the law reports
under the citation 2017 (3) MLJ 521 and it also showed that he went
unrepresented therein. The appellant categorically submits that it
was only then that the appellant came to know that the OSA arising
from the suit had been decided against him ex-parte. Prayer was
made to allow the appeals.
[2024] 8 S.C.R. 1009

A.B. Govardhan v. P. Ragothaman

SUBMISSIONS BY THE RESPONDENT-DEFENDANT:
17. Per contra, learned senior counsel for the respondent submitted that
there is no merit in the present appeals and the impugned orders
do not call for any interference by this Court under Article 136 of the
Constitution of India (hereinafter referred to as the “Constitution”). It
was submitted that the Agreement does not refer to any mortgage
having been created, since the recitals therein make it clear that
the Agreement was to sell the schedule property to the appellant,
and for the said purpose alone, the title deed of the property was
handed over to the appellant. It was submitted that when the very
genesis of the suit is the Agreement and the Agreement per se does
not disclose the creation of any mortgage, a suit for foreclosure
cannot be maintained and the Division Bench had rightly held so.
The findings in the First Impugned Order that no mortgage has been
created, stands justified in view of the contents of the Agreement.
18. Next, it was advanced that the plaint claims that Rs.23,96,000/-
(Rupees Twenty Three Lakhs Ninety Six Thousand) was due as
per the Agreement by including interest @ 36% p.a. till the date of
institution of the suit. It was submitted that no particulars have been
set forth in the plaint as to how this amount of Rs.23,96,000/- (Rupees
Twenty Three Lakhs Ninety Six Thousand) was arrived at. While
the cause of action pleaded in the suit makes reference only to the
Agreement, the appellant makes a claim in respect of the mortgages
dated 16.03.1995 and 17.04.1995, while also reserving the right to
take separate action. Thus, it was submitted that the appellant has
not put forth any specific case but has attempted to intermingle
the mortgages and/or promissory notes with the Agreement. It was
submitted that the mortgages dated 16.03.1995 and 17.04.1995 as
also the promissory notes have been merged to arrive at the figure
of Rs.11,00,000/- (Rupees Eleven Lakhs), which is being claimed as
due from the respondent. It was further submitted that the promissory
notes have not been exhibited in the suit.
19. Learned Senior counsel also pointed out that in respect of the
two mortgages dated 16.03.1995 and 17.04.1995, the High Court
in Second Appeal6 No.1235 of 2014 (which emanated from a suit
for redemption filed by the respondent) passed an interim order

6 Hereinafter abbreviated to “SA”.
1010 [2024] 8 S.C.R.

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dated 25.08.2022, directing the respondent to pay the appellant
a sum of Rs.10,00,000/- (Rupees Ten Lakhs), being the principal
and interest on both the mortgages. Subsequently, the High Court,
by way of its final order dated 24.01.2023 in the said SA, noted
the payments made by the respondent to the appellant, the return
of the original Mortgage Deeds and also the cancellation of the
mortgages. Thus, as the decree in the redemption suit had been
complied with, it dismissed the second appeal as having become
infructuous. Payment had been made and, after receiving the same,
the appellant had returned the original title deeds to the respondent
in respect of the property which was the subject-matter of the two
mortgages dated 16.03.1995 and 17.04.1995.
20. It was further submitted that in the criminal case filed by the
appellant against the respondent under Section 138 of the Negotiable
Instruments Act, 1881, this Court dismissed Special Leave Petition
(Criminal) No.994 of 2019,7 confirming the acquittal of the respondent.
As regards the Second Impugned Order, it was submitted that the
facts recorded therein speak for themselves and the appellant did not
deserve any indulgence. Based on the above pleas, the respondent
has sought dismissal of the instant appeals.
ANALYSIS, REASONING & CONCLUSION:
21. Having given our anxious thought to the lis, we find that the Orders
impugned need interference.
22. In our view, the Single Judge had appreciated the bundle of facts in
the correct perspective, that is, the respondent had, by way of the
Agreement, created a mortgage by deposit of title deeds. There was
no redemption of this mortgage. The Division Bench fell in error in
concluding that “The plaint averments are self-contradictory, vague
and does not make out a clear case of mortgage.” (sic). Moreover, the
plea of the respondent that the mortgage was redeemed is factually

7 Order dated 28.08.2023 reads as below:
“Heard learned counsel for the petitioner.
After having perused the evidence of the petitioner- complainant, we are satisfied that the acquittal of the
respondent is a possible conclusion, which could have been recorded by the High Court.
Though, something can be said about the manner in which the findings have been recorded by the
High Court, we are recording our findings after having perused the evidence of the complainant. Hence,
we concur with the ultimate order of the High Court and accordingly, the special leave petition stands
dismissed.
Pending application(s), if any, shall stand disposed of.”
[2024] 8 S.C.R. 1011

A.B. Govardhan v. P. Ragothaman

incorrect. Another point not noted by the Division Bench is that the
mortgage which took care of the return of Rs.8,50,000/- (Rupees
Eight Lakhs Fifty Thousand), was never redeemed and initially, only
re the two previous mortgages, the principal amount of Rs.1,50,000/-
(Rupees One Lakh Fifty Thousand) was returned, without the agreed
interest. As noted above, subsequent to the passing of the Impugned
Orders, in SA No.1235 of 2014, interim Order dated 25.08.2022 had
directed the respondent to pay the appellant a sum of Rs.10,00,000/-
(Rupees Ten Lakhs), being the principal and interest on both the
mortgages. This stood complied with and the SA was dismissed as
having become infructuous on 24.01.2023.
23. However, the Agreement envisaged property worth Rs.9,00,000/-
(Rupees Nine Lakhs) out of the total claimed due of Rs. 11,00,000/-
(Rupees Eleven Lakhs), being registered in favour of the appellant
or his nominee. The Agreement also stipulated that after redeeming
the earlier/previous mortgages, the respondent would re-mortgage for
the purpose of raising Rs.2,00,000/- (Rupees Two Lakhs). Thereafter,
the said sum of Rs.2,00,000/- (Rupees Two Lakhs) would be paid
to the appellant. The said condition was not followed through i.e.,
no Sale Deed was executed and registered, nor was the sum of
Rs.2,00,000/- (Rupees Two Lakhs) paid. We are of the view that in
such a case, it was well-within the competence of the appellant to
move the Court, which he did by instituting the suit.
24. Another factor is that the appellant was not heard in the appeal,
as recorded in the First Impugned Order itself. Undoubtedly, in
the face of non-appearance by the appellant before it, the Division
Bench was free to proceed with final hearing of the appeal, as it did.
However, what seems to have transpired is that in the absence of
the appellant, what was averred by the respondent in the appeal was
accepted as correct by the Division Bench. Fact remained that the
respondent admitted to having executed Exhibit P-1 (the Agreement)
and that the signature(s) thereon were his, in the Proof Affidavit
dated 01.03.2010 as also cross-examination dated 08.03.2010.
No doubt, he (respondent) has denied its voluntary execution and
contended that it was under coercion and threat, but no evidence
was brought or led by him to support this plea. The Division Bench
opined, correctly, that “It is true that there was no supporting evidence
adduced by him to show as to how he was threatened and forced to
execute Ex.P1.” Pausing here, we may emphasise that for every fact
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which is pleaded, there has to be evidence, either oral or documentary,
to substantiate the same. A bald averment or mere statement by a
defendant bereft of evidentiary material to back up such averment/
statement takes such defendant’s case nowhere. While deciding a
statutory appeal under Section 116A of the Representation of the
People Act, 1951 against an order of the Gauhati High Court rejecting
an Election Petition, this Court in Kalyan Kumar Gogoi v Ashutosh
Agnihotri (2011) 2 SCC 532 commented that the term ‘evidence’ is
used colloquially in different senses:
“33. The word “evidence” is used in common parlance in
three different senses: (a) as equivalent to relevant, (b) as
equivalent to proof, and (c) as equivalent to the material,
on the basis of which courts come to a conclusion about
the existence or non-existence of disputed facts. Though,
in the definition of the word “evidence” given in Section 3
of the Evidence Act one finds only oral and documentary
evidence, this word is also used in phrases such as best
evidence, circumstantial evidence, corroborative evidence,
derivative evidence, direct evidence, documentary
evidence, hearsay evidence, indirect evidence, oral
evidence, original evidence, presumptive evidence, primary
evidence, real evidence, secondary evidence, substantive
evidence, testimonial evidence, etc.”
(emphasis supplied)
25. However, we see in the facts at hand that there is no dispute qua
execution of the Agreement. The respondent claims/pleads coercion
etc. Arguendo, such was the case, what would assume relevance
would be the steps taken immediately thereafter by the respondent.
Admittedly, no steps whatsoever were taken, in law, by the respondent
to resile from the Agreement or to revoke it for at least half a decade
i.e., from the date of the Agreement till the suit came to be instituted.
The respondent did not even lodge appropriate legal proceedings
and hence, it does not lie in his mouth to take the plea that the
Agreement was not signed voluntarily. If such coercion etc. had
actually occurred, the respondent has no explanation to offer as to
why he did not avail of any civil law remedy (to have the Agreement
nullified or voided) or take recourse to criminal law (filing a complaint
or registering a First Information Report). What seems clear to us
[2024] 8 S.C.R. 1013

A.B. Govardhan v. P. Ragothaman

is that the panchayat tried to resolve the dispute and that led to the
Agreement between the parties.
26. It would be profitable to refer to some decisions, after looking at the
relevant provisions of the Transfer of Property Act, 1882 (hereinafter
referred to as the “Act”). Chapter IV of the Act is entitled “Of Mortgages
Of Immovable Property And Charges” and the relevant Section is
quoted below:
“58. “‘Mortgage’, ‘mortgagor’, ‘mortgagee’, ‘mortgage-
money’ and ‘mortgage-deed’” defined.—(a) A mortgage
is the transfer of an interest in specific immoveable property
for the purpose of securing the payment of money advanced
or to be advanced by way of loan, an existing or future
debt, or the performance of an engagement which may
give rise to a pecuniary liability.
The transferor is called a mortgagor, the transferee a
mortgagee; the principal money and interest of which
payment is secured for the time being are called the
mortgage-money, and the instrument (if any), by which
the transfer is effected is called a mortgage-deed.
(b) Simple mortgage.—Where, without delivering possession
of the mortgaged property, the mortgagor binds himself
personally to pay the mortgage-money, and agrees,
expressly or impliedly, that, in the event of his failing to
pay according to his contract, the mortgagee shall have a
right to cause the mortgaged property to be sold and the
proceeds of sale to be applied, so far as may be necessary,
in payment of the mortgage-money, the transaction is called
a simple mortgage and the mortgagee a simple mortgagee.
(c) Mortgage by conditional sale.—Where the mortgagor
ostensibly sells the mortgaged property—
on condition that on default of payment of the mortgage-
money on a certain date the sale shall become absolute, or
on condition that on such payment being made the sale
shall become void, or
on condition that on such payment being made the buyer
shall transfer the property to the seller,
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the transaction is called a mortgage by conditional sale
and the mortgagee a mortgagee by conditional sale:
Provided that no such transaction shall be deemed to
be a mortgage, unless the condition is embodied in the
document which effects or purports to effect the sale.
(d) Usufructuary mortgage.—Where the mortgagor
delivers possession or expressly or by implication
binds himself to deliver possession of the mortgaged
property to the mortgagee, and authorises him to retain
such possession until payment of the mortgage-money,
and to receive the rents and profits accruing from the
property or any part of such rents and profits and to
appropriate the same in lieu of interest, or in payment of
the mortgage-money, or partly in lieu of interest or partly
in payment of the mortgage-money, the transaction is
called an usufructuary mortgage and the mortgagee an
usufructuary mortgagee.
(e) English mortgage.—Where the mortgagor binds
himself to re-pay the mortgage-money on a certain date,
and transfers the mortgaged property absolutely to the
mortgagee, but subject to a proviso that he will re-transfer
it to the mortgagor upon payment of the mortgage-money
as agreed, the transaction is called an English mortgage.
(f) Mortgage by deposit of title-deeds.—Where a person in
any of the following towns, namely, the towns of Calcutta,
Madras, and Bombay, and in any other town which the
State Government concerned may, by notification in the
Official Gazette, specify in this behalf, delivers to a creditor
or his agent documents of title to immoveable property,
with intent to create a security thereon, the transaction is
called a mortgage by deposit of title-deeds.
(g) Anomalous mortgage.—A mortgage which is not a
simple mortgage, a mortgage by conditional sale, an
usufructuary mortgage, an English mortgage or a mortgage
by deposit of title-deeds within the meaning of this section
is called an anomalous mortgage.”
(emphasis supplied)
[2024] 8 S.C.R. 1015

A.B. Govardhan v. P. Ragothaman

27. In Syndicate Bank v Estate Officer & Manager, APIIC Ltd. (2007)
8 SCC 361, this Court held:
“28. The requisites of an equitable mortgage are : (i) a
debt; (ii) a deposit of title deeds; and (iii) an intention that
the deeds shall be security for the debt. The existence
of the first and third ingredients of the said requisites is
not in dispute. The territorial restrictions contained in the
said provision also does not stand as a bar in creating
such a mortgage. The principal question, which, therefore,
requires consideration is as to whether for satisfying the
requirements of Section 58(f) of the Transfer of Property
Act, it was necessary to deposit documents showing
complete title or good title and whether all the documents
of title to the property were required to be deposited.
A fortiori the question which would arise for consideration
is as to whether in all such cases, the property should
have been acquired by reason of a registered document.
xxx
38. In K.J. Nathan v. S.V. Maruty Reddy [AIR 1965 SC 430:
(1964) 6 SCR 727] this Court held: (AIR pp. 435-36, para
10)
“10. The foregoing discussion may be summarised
thus: Under the Transfer of Property Act a mortgage by
deposit of title deeds is one of the forms of mortgages
whereunder there is a transfer of interest in specific
immovable property for the purpose of securing payment
of money advanced or to be advanced by way of loan.
Therefore, such a mortgage of property takes effect
against a mortgage deed subsequently executed and
registered in respect of the same property. The three
requisites for such a mortgage are, (i) debt, (ii) deposit of
title deeds; and (iii) an intention that the deeds shall be
security for the debt. Whether there is an intention that
the deeds shall be security for the debt is a question of
fact in each case. The said fact will have to be decided
just like any other fact on presumptions and on oral,
documentary or circumstantial evidence. There is no
presumption of law that the mere deposit of title deeds
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constitutes a mortgage, for no such presumption has
been laid down either in the Evidence Act or in the
Transfer of Property Act. But a court may presume
under Section 114 of the Evidence Act that under
certain circumstances a loan and a deposit of title deeds
constitute a mortgage. But that is really an inference
as to the existence of one fact from the existence of
some other fact or facts. Nor the fact that at the time
the title deeds were deposited there was an intention
to execute a mortgage deed in itself negatives, or is
inconsistent with, the intention to create a mortgage
by deposit of title deeds to be in force till the mortgage
deed was executed. The decisions of English Courts
making a distinction between the debt preceding the
deposit and that following it can at best be only a guide;
but the said distinction itself cannot be considered to
be a rule of law for application under all circumstances.
Physical delivery of documents by the debtor to the
creditor is not the only mode of deposit. There may be
a constructive deposit. A court will have to ascertain in
each case whether in substance there is a delivery of
title deeds by the debtor to the creditor. If the creditor
was already in possession of the title deeds, it would
be hypertechnical to insist upon the formality of the
creditor delivering the title deeds to the debtor and the
debtor redelivering them to the creditor. What would be
necessary in those circumstances is whether the parties
agreed to treat the documents in the possession of the
creditor or his agent as delivery to him for the purpose
of the transaction.”
The question which arose therein was that what would be
the extent of subject-matter of mortgage; the entire property
forming the subject-matter of mortgage or a part thereof.”
(emphasis supplied)
28. In the interest of completeness, we may note that the Bench
of 2 learned Judges in Syndicate Bank (supra) had referred to
a larger Bench, the question as to whether a property could be
equitably mortgaged by deposit of documents other than the title
[2024] 8 S.C.R. 1017

A.B. Govardhan v. P. Ragothaman

deeds or registered title document. However, the 3-Judges Bench
in Syndicate Bank v Estate Officer and Manager (Recoveries),
Andhra Pradesh Industrial Infrastructure Corporation Limited
(2021) 3 SCC 736 was “of the opinion that the reference need not
be answered in the peculiar facts and circumstances of the case
since in our opinion the State of Andhra Pradesh and its successor
viz. APIIC and Telangana Industrial Infrastructure Ltd., are estopped
from challenging the validity of the mortgage.” In State of Haryana
v Narvir Singh (2014) 1 SCC 105, this Court observed:
“11. A mortgage inter alia means transfer of interest in the
specific immovable property for the purpose of securing
the money advanced by way of loan. Section 17(1)(c)
of the Registration Act provides that a non-testamentary
instrument which acknowledges the receipt or payment of
any consideration on account of the creation, declaration,
assignment, limitation or extension of any such right, title
or interest, requires compulsory registration. A mortgage
by deposit of title deeds in terms of Section 58(f) of the
Transfer of Property Act surely acknowledges the receipt
and transfer of interest and, therefore, one may contend
that its registration is compulsory. However, Section 59 of
the Transfer of Property Act mandates that every mortgage
other than a mortgage by deposit of title deeds can be
effected only by a registered instrument. In the face of it,
in our opinion, when the debtor deposits with the creditor
title deeds of the property for the purpose of security,
it becomes a mortgage in terms of Section 58(f) of the
Transfer of Property Act and no registered instrument is
required under Section 59 thereof as in other classes of
mortgage. The essence of a mortgage by deposit of title
deeds is the handing over, by a borrower to the creditor,
the title deeds of immovable property with the intention
that those documents shall constitute security, enabling
the creditor to recover the money lent. After the deposit of
the title deeds the creditor and borrower may record the
transaction in a memorandum but such a memorandum
would not be an instrument of mortgage. A memorandum
reducing other terms and conditions with regard to the
deposit in the form of a document, however, shall require
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registration under Section 17(1)(c) of the Registration
Act, but in a case in which such a document does not
incorporate any term and condition, it is merely evidential
and does not require registration.
12. This Court had the occasion to consider this question
in Rachpal Mahraj v. Bhagwandas Daruka [1950 SCC 195 :
AIR 1950 SC 272] and the statement of law made therein
supports the view we have taken, which would be evident
from the following passage of the judgment: (AIR p. 273,
para 4)
“4. A mortgage by deposit of title deeds is a form
of mortgage recognised by Section 58(f) of the TP
Act, which provides that it may be effected in certain
towns (including Calcutta) by a person ‘delivering
to his creditor or his agent documents of title to
immovable property with intent to create a security
thereon’. That is to say, when the debtor deposits
with the creditor the title deeds of his property with
intent to create a security, the law implies a contract
between the parties to create a mortgage, and no
registered instrument is required under Section 59 as
in other forms of mortgage. But if the parties choose
to reduce the contract to writing, the implication is
excluded by their express bargain, and the document
will be the sole evidence of its terms. In such a case
the deposit and the document both form integral parts
of the transaction and are essential ingredients in
the creation of the mortgage. As the deposit alone is
not intended to create the charge and the document,
which constitutes the bargain regarding the security,
is also necessary and operates to create the charge
in conjunction with the deposit, it requires registration
under Section 17 of the Registration Act, 1908, as a
non-testamentary instrument creating an interest in
immovable property, where the value of such property
is one hundred rupees and upwards. The time factor
is not decisive. The document may be handed over
to the creditor along with the title deeds and yet may
not be registrable.”
[2024] 8 S.C.R. 1019

A.B. Govardhan v. P. Ragothaman

13. This Court while relying on the aforesaid judgment in
United Bank of India Ltd. v. Lekharam Sonaram & Co. [AIR
1965 SC 1591] reiterated as follows: (AIR p. 1593, para 7)
“7. … It is essential to bear in mind that the essence
of a mortgage by deposit of title deeds is the actual
handing over by a borrower to the lender of documents
of title to immovable property with the intention that
those documents shall constitute a security which
will enable the creditor ultimately to recover the
money which he has lent. But if the parties choose
to reduce the contract to writing, this implication of
law is excluded by their express bargain, and the
document will be the sole evidence of its terms. In
such a case the deposit and the document both form
integral parts of the transaction and are essential
ingredients in the creation of the mortgage. It follows
that in such a case the document which constitutes
the bargain regarding security requires registration
under Section 17 of the Registration Act, 1908, as a
non-testamentary instrument creating an interest in
immovable property, where the value of such property
is one hundred rupees and upwards. If a document
of this character is not registered it cannot be used
in the evidence at all and the transaction itself cannot
be proved by oral evidence either.”
xxx
14.2. But the question is whether a mortgage by deposit
of title deeds is required to be done by an instrument at
all. In our opinion, it may be effected in a specified town
by the debtor delivering to his creditor documents of title
to immovable property with the intent to create a security
thereon. No instrument is required to be drawn for this
purpose. However, the parties may choose to have a
memorandum prepared only showing deposit of the title
deeds. In such a case also registration is not required. But
in a case in which the memorandum recorded in writing
creates rights, liabilities or extinguishes those, the same
requires registration.
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14.3. In our opinion, the letter of the Finance Commissioner
would apply in cases where the instrument of deposit
of title deeds incorporates the terms and conditions in
addition to what flows from the mortgage by deposit of
title deeds. But in that case there has to be an instrument
which is an integral part of the transaction regarding the
mortgage by deposit of title deeds. A document merely
recording a transaction which is already concluded and
which does not create any rights and liabilities does not
require registration.
14.4. Nothing has been brought on record to show existence
of any instrument which has created or extinguished any
right or liability. In the case in hand, the original deeds have
just been deposited with the Bank. In the face of it, we are
of the opinion that the charge of mortgage can be entered
into revenue record in respect of mortgage by deposit of
the title deeds and for that, an instrument of mortgage is
not necessary. A mortgage by deposit of the title deeds
further does not require registration. Hence, the question of
payment of registration fee and stamp duty does not arise.
xxx
14.5. By way of abundant caution and at the cost of
repetition we may, however, observe that when the
borrower and the creditor choose to reduce the contract
into writing and if such a document is the sole evidence
of the terms between them, the document shall form an
integral part of the transaction and the same shall require
registration under Section 17 of the Registration Act.”
(emphasis supplied)
29. We are of the opinion that the Single Judge has appreciated the
law correctly as far as the Agreement is concerned to hold it to
be a mortgage in view of Section 58(f) of the Act. We have read
and re-read the Agreement. We have also minutely considered the
exposition of law made in Narvir Singh (supra). We are of the opinion
that the Agreement only records what has happened and does not
create/extinguish rights/liabilities. It would, therefore, be covered by
para 14.3 of Narvir Singh (supra), as highlighted hereinbefore. The
reasoning of the Division Bench proceeds as under:
[2024] 8 S.C.R. 1021

A.B. Govardhan v. P. Ragothaman

“10. …The recitals of the document marked as Ex.P1 and
duly extracted in the judgment does not contain any, clear
admission that a mortgage was created on the property.
The document proceeds as if the appellant agreed to pay
a sum of Rs.11 lakhs in full and final settlement. There
is nothing to show that a mortgage was created. Even in
the evidence given by the respondent as P.W.1, it was
his case that the parent document was handed over only
as a security. Such being the evidence on record, the
learned single Judge was not correct in giving a ﬁnding
that mortgage was created and the title deed was given in
furtherance of the mortgage. We are therefore of the view
that there is no evidence adduced by the respondent to
show that a mortgage deed was executed by the appellant
and as such, he is entitled to a mortgage decree. …”
(sic)
30. Quite evidently, the Division Bench did not account for Section 58(f)
of the Act. Indubitably, the respondent pleaded threat and coercion
whilst executing/signing the Agreement, yet having accepted that he
did sign the same in his own hand, the burden was on him to prove
such threat/coercion. Looked at from any angle, the First Impugned
Order suffers from legal errors, and cannot withstand the scrutiny
of law. At the cost of repetition, it is to be stated that the Single
Judge has rightly considered the factual prism and focused on the
core issue without reference to facts which were irrelevant and not
germane to the issue(s) before her.
31. The Second Impugned Order raises serious questions about how and
why the appellant went into slumber. If we may say so, a ‘fantastic’
plea was taken that the appellant had engaged a counsel only for
the delay condonation MP and not to argue the main appeal. Such
a contention is noted only for the purpose of outright rejection. This
‘fantastic’ plea has been dealt with correctly by the Division Bench
and no legal infirmity can be found therein.
32. Alas, only if things were as simple as they seemed! We have already
indicated that the First Impugned Order has to be set aside. In order
to do justice, quashing of the First Impugned Order would necessarily
mean that the effect of the Second Impugned Order would get
nullified, for all practical purposes, despite this Court being of the
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view that on its own merits, the Second Impugned Order cannot be
faulted. However, for such legal misadventure resulting in wastage
of precious judicial time of the High Court, which could have been
better spent answering the call of justice raised by the teeming
millions, we impose costs of Rs.1,20,000/- (Rupees One Lakh Twenty
Thousand) on the appellant. Such cost shall be deposited within 6
weeks with the Registry of the High Court, to be utilised as follows:
i. Rs.40,000 for juvenile welfare in a manner to be decided by
the Juvenile Justice Monitoring Committee;
ii. Rs.40,000 for welfare of the Advocate-Clerks in a manner to
be decided by Hon’ble the Acting Chief Justice, and;
iii. Rs.40,000 for legal aid in a manner to be decided by the High
Court Legal Services Committee.
Receipt of deposit be filed in the Registry of this Court soon thereafter.
In case of non-compliance, the matter will be placed before us with
appropriate Office Report.
33. Accordingly, both Impugned Orders stand set aside. The Judgment
dated 01.04.2010 passed by the Single Judge stands restored with
a slight modification i.e., reduction in the rate of interest which has
been claimed by and allowed to the appellant. Interest at the rate
of 36% p.a. is on the excessive side and we pare down the same
to 12% p.a. in the interest of justice. Hence, simple interest will run
only @ 12% p.a. from 24.06.2000 till the date of realisation.
34. The appeals are allowed in the above terms.
35. I.A. No.16204/2019 for exemption from filing Certified Copy of the
Impugned Judgment(s) is allowed. I.A. No.180367/2019 for permission
to file Additional Documents is allowed.
36. I.A. No.16203/2019 seeks condonation of delay in filing the petitions.
There is a delay of 589 days in filing the petition against the First
Impugned Order. The petition against the Second Impugned Order
is also delayed by approximately 84 days. We are cognizant that
the appellant had moved the Division Bench seeking a fresh hearing
of the main appeal, which led to passing of the Second Impugned
Order. In Collector, Land Acquisition, Anantnag v Mst Katiji
(1987) 2 SCC 107, the Court noted that it had been adopting a
justifiably liberal approach in condoning delay and that “justice on
[2024] 8 S.C.R. 1023

A.B. Govardhan v. P. Ragothaman

merits” is to be preferred as against what “scuttles a decision on
merits”. Albeit, while reversing an order of the High Court therein
condoning delay, principles to guide the consideration of an application
for condonation of delay were culled out in Esha Bhattacharjee v
Managing Committee of Raghunathpur Nafar Academy (2013)
12 SCC 649. One of the factors taken note of therein was that
substantial justice is paramount.8
37. In N L Abhyankar v Union of India (1995) 1 MhLJ 503, a Division
Bench of the Bombay High Court at Nagpur considered, though
in the context of delay vis-à-vis Article 226 of the Constitution, the
decision in M/s Dehri Rohtas Light Railway Company Limited v
District Board, Bhojpur (1992) 2 SCC 598, and held that “The real
test for sound exercise of discretion by the High Court in this regard
is not the physical running of time as such, but the test is whether by
reason of delay there is such negligence on the part of the petitioner,
so as to infer that he has given up his claim or whether before the
petitioner has moved the Writ Court, the rights of the third parties
have come into being which should not be allowed to be disturbed
unless there is reasonable explanation for the delay.”9 The Bombay
High Court’s eloquent statement of the correct position in law found
approval in Municipal Council, Ahmednagar v Shah Hyder Beig
(2000) 2 SCC 48 and Mool Chandra v Union of India, 2024 SCC
OnLine SC 1878.
38. In the wake of the authorities above-mentioned, taking a liberal
approach subserving the cause of justice, we condone the delay and
allow I.A. No.16203/2019, subject to payment of costs of Rs.20,000/-
(Rupees Twenty Thousand) by the appellant to the respondent.

Result of the case: Appeals allowed.

†
Headnotes prepared by: Divya Pandey

8 Para 21.3 of Esha Bhattacharjee (supra).
9 Emphasis supplied.