Decided on August 19,1963

Kamlabai And Another Respondents


P.JAGANMOHAN REDDY,J. - (1.) In view of an apparent conflict between a Full Bench of the Madras High Court in Crompton Engineering Co., (Madras) Ltd. v. Chief Controlling Revenue Authority Madras, A.I.R. 1953 Madras 764 and a Full Bench of this Court in Midde Varaprasada Rao v. Collector of Krishna, 1959-2 Andh WR 102 : A.I.R. 1959 Andhra Pradesh 650 (FB) on the interpretation of Section 2(17) of the Indian Stamp Act as to what would constitute a mortgage within the meaning of that section, this case has been directed to be referred by a Division Bench of this Court consisting of one of us namely Basi Reddy, J. and Gopal Rao Ekbote, J., to a Full Bench of five Judges or more for resolving the conflict.
(2.) The facts in so far as they are relevant for the determination of the question are that the plaintiff had filed a money suit against the defendants for the price of articles supplied to Gande Chinniah, the pre-decessor-in-interest of the 1st and 2nd defendants for their family needs, which debt he acknowledged by a receipt dated 1-4-1963. This receipt was filed with the plaint, the translation whereof in English is as follows : "Agreement executed by Gande Chinniah, son of Linganna, resident of Balkonda, Taluk Armoor, in favour of Hazori Gangaram, son of Anthaji, to the effect that from 16-6-1952 to 9-9-1962, principal amount Rs. 1397-7-0. This whole amount in respect of 'Khalli'. For this, I have given the key of my free will. Upon this, there can be no objection by me or by heirs. You can put another lock instead of the present one. After paying whole of the above amount, I shall take my key and letter back." This document was attested by three witnesses. Evidently on the objections taken by the respondents an issue was raised as to whether this document constituted a mortgage within the meaning of Section 2(17) of the Stamp Act. The Court-fee Examiner of the High Court in the course of his examination of the documents filed in Court considered that the sale-receipt was a mortgage under Section 2(17) of the Act. The District Munsif, Armoor, heard the arguments of the learned advocates appearing on behalf of the parties and held that taking into consideration certain circumstances namely that the key of the house was delivered showing that there was delivery of possession that the predecessor-in-interest of the defendants had no objection of any kind and that the key would be handed over only on the repayment of the loan the document was a mortgage-deed as contemplated by Section 2(17) of the Stamp Act and was chargeable with stamp duty under Article 35 of the Act. The plaintiff was directed to pay Rs. 495 as penalty and stamp duty.
(3.) The question in this revision petition is whether the suit document is a mortgage within the meaning of Section 2(17) of the Stamp Act. In order to determine this question it is necessary to examine the relevant provisions of the Stamp Act. It is denied by Mr. Jeevan Reddy, the learned Advocate for the petitioner, that under the document by whatever name it may be called, possession of specific immovable property was given which possession is to be retained by the plaintiff till the amount of debt due from the executant is discharged. There is little doubt that this document affects the transfer of an interest in immovable property of the value of Rs. 100 or upwards for the purpose of securing a debt and is, therefore, a mortgage within the meaning of Section 58 of the Transfer of Property Act and it would only be valid by executing a registered instrument signed by the mortgagor and attested by at least two witnesses as required under Section 59 of the Transfer of Property Act. While this is so, the question is whether this document is a mortgage-deed within the meaning of Section 2(17) of the Stamp Act which defines it as including "every instrument whereby, for the purpose of securing money advanced, or to be advanced, by way of loan, or an existing or future debt, or the performance of an engagement, one person transfers, or creates, to, or in favour of, another, a right over or in respect of specified property." It may, however, be noticed that while Section 58 and Section 59 of the Transfer of Property Act define what is a mortgage and how such a mortgage can be effected. Section 2(17) of the Stamp Act defines a mortgage-deed as such which implies that while under the Transfer of Property Act the requirements of a valid mortgage are set out the Stamp Act is only concerned with defining what a mortgage deed is, which ex facie need necessarily have the effect of creating a valid mortgage. We shall deal with this aspect of the matter in greater detail after we have referred to the two decisions cited in the order of reference. In A.I.R. 1953 Madras 764 a Full Bench of the Madras High Court was dealing with an unattested and unregistered document dated 22-3-1948, one of the clauses of which was construed as creating a mortgage over the borrower's floating assets, comprising specified immovable property, lands, buildings and premises bearing door No. 27. Tirrovottiyur High Road, Madras. In construing whether this document was a mortgage-deed, it was held by the Full Bench that the transfer provided in Section 2(17) of the Stamp Act is a transfer valid in law, and as there can be no transfer unless the requirements of Section 59 of the Transfer of Property Act are satisfied where the specified immoveable property is worth Rs. 100 or upwards, the document purporting to be a mortgage-deed of such property is liable to stamp duty where it is neither attested nor registered. Rajagopalan, J., speaking for the Court said that to ensure the validity of the instrument as a mortgage, attestation is made as much a part of the execution as the signature of the mortgagor. The contention of the Government Pleader in that cast was that on 29-5-1948, when the document was impounded under Section 33 of the Stamp Act, the time for effective registration of that document had expired. The Bench pointed out that the document was neither attested nor registered and the impounding authority could have enforced registration, and that in any case, it could cure the failure to attest, which by itself was enough to invalidate the document as an instrument of mortgage.;

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