A. B. Govardhan Vs P. Ragothaman (Supreme Court of India)
The Supreme Court allowed the appeals challenging two orders of the Madras High Court arising from a mortgage suit concerning recovery of money advanced by the appellant to the respondent. The dispute centred on an agreement under which the respondent handed over title deeds of property after earlier loan transactions, while the respondent contended that no mortgage had been created. The Single Judge had held that the respondent had created an equitable mortgage by depositing the title deeds and decreed the suit, but the Division Bench reversed the decree, holding that no mortgage had been established.
The Supreme Court held that the Single Judge had correctly appreciated the evidence and the law relating to mortgage by deposit of title deeds under Section 58(f) of the Transfer of Property Act, 1882. It observed that the agreement recorded an existing debt, deposit of title deeds, and the intention to create security, satisfying the essential ingredients of an equitable mortgage. The Court found that the respondent had admitted execution of the agreement and had produced no evidence to substantiate allegations of coercion. It also noted that the respondent had taken no legal steps for several years to challenge or revoke the agreement. Accordingly, the Court concluded that the Division Bench had committed legal errors in setting aside the mortgage decree.
