IN THE KARNATAKA HIGH COURT 

S. Krishna Swamy for the appellant. 

JUDGMENT 

T. N. VALLINAYAGAM J. - Notice to respondent No. 1 and respondent No. 2 issued. Cover returned as not claimed. Under these circumstances, services held sufficient. The appeal itself is taken up for hearing. 

The State Bank of India, the plaintiff is the appellant, is aggrieved by the dismissal of the suit for recovery of money based on mortgage. 

O.S. No. 131 of 1985 on the file of the Civil judge, at Kolar, for a suit filed for recovery of money, namely, Rs. 70,787.45 together with interest at 13.5 per cent. This money was granted on a cash credit facility and the suit schedule properties were given as security and equitable mortgage has been created for due repayment of the money advanced. Cash credit facility was available for Rs. 30,000 and medium term loan of Rs. 50,000 was also granted by the bank. The balance was confirmed by the defendants as per the documents dated September 25, 1984, June 23, 1984, and April 10, 1985, and the revival letter dated August 26, 1982. The second defendant was a guarantor and he created the equitable mortgage offering his property as security. When the money stood due and outstanding and no payment forthcoming to the defendants, the suit came to be filed. 

The first defendant is the principal borrower admitted the grant of loan, denied execution of letters of confirmation as well as the revival letter. The creation of mortgage also was denied. The trial court found the availing of the cash credit facility and medium term loan to the extent of Rs.30,000 and Rs. 20,000 as true but chose to hold that there is no creation of mortgage as the same was not registered under section 17 of the Registration Act, 1908, and also held that the suit is barred by limitation. Notwithstanding the admission made by the defendant in the written statement and the fact that such loan was granted in the year 1981, only the suit is filed in the year 1985, on the basis of the acknowledgment of the liabilities apart from the mortgage created. 

Unfortunately, the appellate court also fell in line with the finding rendered by the trial court on the question of limitation and the mortgage is also not valid for want of registration. 

Notice of admission of this appeal was ordered to the respondents and the service on them having been held sufficient, the appeal is taken up for final disposal. 

The question is whether the mortgage is true ? 

It is unfortunate that judicial officers do not know even the basics of law and they have forgotten what they have read in colleges as to the different types of mortgages under the Transfer of Property Act. Mortgage by deposit of title deeds, which is otherwise known as equitable mortgage is one of the recognised forms of mortgage contemplated with the provisions of the Transfer of Property Act. The basic difference between this mortgage and the other mortgage is that in respect of this mortgage, mortgage is not conditional nor is it required under section 17 of the Registration Act. This basic feature of law should never be forgotten by the authority, who is sought for redressal of the grievances by a litigant who seeks justice. If this is going to be the position, then the position of the parties will be greatly prejudiced. I have, therefore, no hesitation to set aside the judgment and decree of the courts below and it should brought to the notice of the court below that registration is not necessary in respect of this type of mortgage. 

In this view, setting aside the judgment and decree of the courts below, the second appeal is allowed. The suit is decreed with costs as prayed for. 

Send a copy of this judgment to the two judges who decided the case as a trial judge as well as the appellate judge, so that they may at least understand the position of law.