31 August 2024 - Legal Updates

1. S. 58(f) TPA | Production of title Deeds As Security Towards Debt Amounts to Creation of ‘Equitable Mortgage’ : Supreme Court

The Supreme Court held that the production of title deeds of the property as a security towards debt amounts to the creation of mortgage by deposit of title deeds under section 58(f) of the Transfer of Property Act, 1882.

It was a case where the respondent/defendant had taken a loan from the appellant and submitted a title deed of the property towards the loan amount it had taken from the appellant. An agreement was entered between the respondent and the appellant that the respondent would execute a sale deed in favour of the appellant when the necessity arises for the appellant. However no sale deed was executed by the respondent in Appellant’s favour.

Thus, an original civil suit was brought by the Appellant before the Single Judge of the Madras High Court seeking a preliminary mortgage decree of the scheduled property against the respondent, and the sale of the mortgaged property.

In essence, the Appellant pleaded that the title deeds of the property so produced by the respondent for the security towards the debt amount create an equitable mortgage by depositing the title deeds entitling the Appellant to sell the mortgaged property to recover the loan amount.

Whereas, the Respondent pleaded that the production of the title deeds of the property towards the debt amount would not amount to the creation of a mortgage under Section 58(f) of TPA because the agreement doesn't stipulate the creation of a mortgage. According to the Respondent, the title deeds were produced so that the sale deed could be executed in the Appellant's favor on its demand.

The High Court's Single Judge decided in favor of the Appellant by holding that the respondent-defendant had agreed to “create equitable mortgage by depositing the title deeds. However, upon an intra-court appeal preferred by the respondent, the Division Bench overturned the Single Bench decision and held that the Appellant had failed to prove that there was a mortgage executed by the Respondent.

Following this, the appeal was preferred before the Supreme Court against the High Court's Division Bench order.

Setting aside the Division Bench decision, the bench comprising Justices Hima Kohli and Ahsanuddin Amanullah observed that the Single Judge findings cannot be interfered with because “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.”

“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”, the judgment authored by Justice Amanullah added.

Also, the Court clarified that the agreement so entered between the Appellant and Respondent regarding the creation of the equitable mortgage by deposit of title deeds need not require Registration under the Registration Act because the agreement only recorded the event occurred between the parties and does not extinguish/create rights or liabilities.

In this regard, the Court drew reference to a case of State of Haryana v Narvir Singh, (2014) 1 SCC 105 where it was held that “a document merely recording a transaction which is already concluded and which does not create any rights and liabilities does not require registration.”

“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”, the court held.

Accordingly, the appeal was allowed thereby restoring the High Court's single-judge judgment. However, a slight modification was made regarding the 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”, the Court held.

Case- A.B. Govardhan vs. P. Ragothaman

2. Supreme Court Issues Notice on RJD MLC Sunil Singh’s Plea Against Expulsion From Bihar Legislative Council For Remarks Against Nitish Kumar

The Supreme Court issued notice in Rashtriya Janta Dal (RJD) MLC Sunil Singh’s plea against expulsion from Bihar Legislative Council for allegedly using defamatory words against State’s Chief Minister Nitish Kumar.

The Bench of Justices Surya Kant and K.V Vishwanathan, however, refused to pass any interim order.

Senior Advocate Abhishek Manu Singhvi, appearing for Singh, cited Ashish Shelar v. Maharashtra Legislative Assembly, where the Court quashed the suspension of MLAs beyond one term. Singhvi added that in the present case, there is expulsion. In Shelar's case, the Top Court had quashed the Maharashtra Assembly's Resolution to suspend 12 BJP MLAs. It held that the rules made to exercise the powers and privileges of the State Legislature constitute law within the meaning of Article 13 of the Indian Constitution.

In his attempt to convince the Court, Singhvi submitted:

“The larger effect is that you can negate democracy Now, I will not speak like this, he will not speak like this but my lords 'Palturam' is something that has been published in newspapers all along. I am not suggesting he is right. Now, he publishes it in the house, which is more protected!”

The alleged incident happened during the budget session that took place this February. The expulsion was made on the basis of a recommendation made by the Ethics Committee of the council. Amongst the accusations against him were calling the Chief Minister Palturam and imitating him.

The recommendation of the committee, inter alia, stated:

“As the Chief Whip of the Opposition, his legislative Responsibility should be more towards the policies, rules and constitutional authority of the House. But he did not follow this in his conduct and behaviour. His efforts to come to the well of the House and raise unrestrained slogans, disrupt the House, disobey the Chair's direction, and insult the Leader of the House by using defamatory and rude words have hurt the dignity of the Upper House.”

“Under clause 10 (d) of Rule 290 of the Bihar Legislative Council's Procedure and Conduct of Business Rules, the Committee recommends unanimously/majority that Dr. Sunil Kumar Singh be relieved from the membership of the Bihar Legislative Council.”

Against the above projection, Singh filed the present writ petition before the Supreme Court seeking to quash the report as illegal and unconstitutional. Further, a direction for not declaring an election pursuant to vacancy arising notification.

Case- Sunil Kumar Singh vs. Bihar Legislative Council and Ors.

3. Supreme Court Deplores Practice of Filing Applications U/S 216 CrPC for Alteration of Charge After Refusal Of Discharge

In a recent judgment, the Supreme Court deplored the practice of accused persons filing applications under Section 216 of the Code of Criminal Procedure seeking alteration of charge after their applications seeking discharge

The Bench of Justices Bela M Trivedi and Satish Chandra Sharma elaborated that this provision does not give any right to the accused to file a fresh application seeking his discharge after the framing of charges. Especially, when a discharge application filed by accused has already been dismissed under Section 227 of CrPC.

The Bench highlighted that once these applications are filed, Trial Court have no option but to decide them. Following this, the same are challenged before the High Court and this leads to derailment of the whole criminal trial.

Terming such practice as “highly deplorable,” the Court said that it should be dealt with sternly by the courts.

“Section 216 does not give any right to the accused to file a fresh application seeking his discharge after the charge is framed by the court, more particularly when his application seeking discharge under Section 227 has already been dismissed. Unfortunately, such applications are being filed in the trial courts sometimes in ignorance of law and sometimes deliberately to delay the proceedings. Once such applications though untenable are filed, the trial courts have no alternative but to decide them, and then again such orders would be challenged before the higher courts, and the whole criminal trial would get derailed. Suffice it to say that such practice is highly deplorable, and if followed, should be dealt with sternly by the courts.”

In the present appeal, arising out of a murder trial, after the accused was denied discharge from the Sessions Court as well as from the High Court in the first round of litigation, he filed another application under Section 216. After the dismissal of the same by the Sessions Court, he approached the High Court under its revisional jurisdiction. The High Court allowed his appeal and discharged him. To this effect, the Top Court observed:

The High Court utterly failed to realise that the order impugned against it was the order passed by the Sessions Court rejecting the application of the Respondent No. 2 seeking modification of the charge framed against him under Section 216 of Cr.P.C., and the said order was an order of interlocutory in nature.”

As per the facts of the present case, the present appellant (ADMK Ravi) had filed an FIR against nine accused, including the present respondent, under several offences including murder. According to the allegations, the accused persons the complainant and his group from filing the nomination at AIADMK Party Office at Dharmapuri. While the accused persons allegedly murdered appellant's brother, they also assaulted him.

When the respondent's discharge application was dismissed by the Sessions and the High Court, he took the recourse of Section 216. As stated, the same was allowed by the High Court. Thus, the present appeal.

Playing its reliance on Amit Kapoor vs. Ramesh Chander and another, the Top Court observed that the scope of interference and exercise of jurisdiction under Section 397 Cr.P.C. (revisional jurisdiction) is extremely limited.

“The Court exercising Revisional Jurisdiction under Section 397 should be extremely circumspect in interfering with the order framing the charge, and could not have interfered with the order passed by the Trial Court dismissing the application for modification of the charge under Section 216 Cr.P.C., which order otherwise would fall in the category of an interlocutory order” it added.

Without mincing its words, the Court said that the revision application was allowed “on an absolutely extraneous consideration and in utter disregard of the settled legal position.” Describing the High Court's order to be illegal, untenable and dehors the material on record, the Court set the same aside.

In furtherance to this, a cost of Rs. 50,000 was levied on the respondent for filing frivolous and untenable applications. This amount was directed to be deposited within two weeks and the same shall be withdrawn by the appellant.

“The Sessions Court is directed to proceed further with the trial against all the accused including the Respondent No. 2 (A-2) in accordance with law and as expeditiously as possible” the Court concluded.

Case- K. Ravi vs. State of Tamil Nadu & Anr.