(2012) 245 KLR 291 

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT: THE HONOURABLE MR.JUSTICE P.BHAVADASAN 

TUESDAY, THE 27TH DAY OF MARCH 2012/7TH CHAITHRA 1934 

AS.No. 503 of 2001 (E) 

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OS.622/1993 of ADDL.SUB COURT, NORTH PARAVUR 

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APPELLANTS/PLAINTIFFS: 

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1. BIJU PAUL, S/O. POULOSE, KANIYAMKUTTIYIL, PERUMBAVOOR KARA, DO VILLAGE. 

2. SHYNI, W/O. BIJU PAUL, -DO- -DO- 

BY ADVS.SRI.R.D.SHENOY (SR.) SRI.S.VINOD BHAT 

RESPONDENTS(DEFENDANTS): 

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1. THE NEDUNGADI BANK LTD., REP. BY MANAGER OF ERNAKULAM SOUTH BRANCH, D.H. ROAD, KOCHI - 16. (SUBSTITUTED) * THE NAME OF THE 1ST RESPONDENT (THE NEDUNGADI BANK LTD.,) IS SUBSTITUTED AS 'PUNJAB NATIONAL BANK' VIDE ORDER DATED 03/09/2010 ON I.A. NO.2242/2010. 

2. JOSEPH, S/O. AUGUSTHY, KUREETHADATHIL, T.B. ROAD, PERUMBAVOOR KARA, DO VILLAGE. 3. SELIN, W/O. JOSEPH (D/O. CHERIYAN, ARAMBATTMAKIYIL) KUREETHADATHIL, -DO- -DO- 

R1 BY ADV. SRI.K.P.BALASUBRAMANYAN 

THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 22/02/2012, THE COURT ON 27-03-2012 DELIVERED THE FOLLOWING: svs 

P. BHAVADASAN, J. 

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A.S. No. 503 of 2001 

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Dated this the 27th day of March, 2012. 

Head Note:-

Transfer of Property Act, 1882 - Section 58(f) - In order to create a valid equitable mortgage by deposit of title deeds, some documents showing the evidence of title must be deposited with the mortgagee. The encumbrance certificate or certificate from the Village Officer do not show the title to the suit property at all. The essence of the transaction is that the title deed deposited shall be security for the debt. It is sufficient if the deeds deposited bona fide relate to the property or are any material evidence of title and are shown to have been deposited with an intention to create a security thereon. The essence of the transaction is that the deposit of title deeds shall be with the intention to create a security for the debt. 

J U D G M E N T 

The plaintiffs, who had their suit dismissed by the lower court, are the appellants. 

2. Plaint item Nos.1 and 2 were obtained by the plaintiffs as per Exts.A1 and A2 dated 24.6.1993. The plaintiffs have ever been in possession and enjoyment of the property from the said date. The second defendant had availed of a loan of Rs.10,00,000/- from Federal Bank, Ernakulam after mortgaging the plaint schedule property in March, 1989. Defendants 2 and 3 executed a mortgage in favour of the said Bank. Since the debt remained undischarged, the Bank initiated proceedings and instituted O.S.231 of 1992 before the Sub Court, North Parur. In order to discharge the debt, defendants 2 and 3 approached the father of the first plaintiff and the plaintiffs had purchased the plaint schedule property. The amount due to the Bank was paid and the defendants had obtained the original assignment deeds namely, Exts. A3 and A3(a) which were handed over to the plaintiffs. After Exts.A1 and A2, the plaintiffs have effected considerable improvements in the plaint schedule property and they are residing in plaint item No.2 house. The plaintiffs became aware of the fact that defendants 2 and 3 had forged the documents and availed of a loan from the first defendant Bank by creating an equitable mortgage in respect of the suit property. The mortgage so created is invalid and is not binding on the plaintiffs. The first defendant Bank had instituted O.S.567 of 1992 to realise the amount from the second defendant. The second defendant entered appearance and filed a written statement admitting the claim. Hence the suit was decreed. The suit property lies within the jurisdiction of Sub Court, North Paravur and Sub Court, Ernakulam has no jurisdiction to pass any decree in respect of the property. Apart from the fact that a wrong court has passed the decree, the plaintiffs were not parties to the said suit. They therefore laid the suit for injunction restraining the plaintiffs from proceedings against the plaint schedule property and for declaration as against defendants 2 and 3. 

3. The first defendant resisted the plea and contended that the suit is a result of collusion between the plaintiffs and defendants 2 and 3 and is not a bonafide one. According to the first defendant, it is possible that defendants 2 and 3 might have deposited fake or fabricated documents with the earlier Bank and availed of a loan. The first defendant had instituted O.S.567 of 1992 before the Sub Court, Ernakulam for realisation of the loan amount and a decree was passed by the said court. The second defendant had deposited the title deeds of the property with the intention of creating mortgage and an equitable mortgage was created by him. Decree obtained by the first defendant Bank is valid and binding and it cannot be avoided by the plaintiffs. They therefore prayed for a dismissal of the suit.

4. Defendants 2 and 3 remained ex-parte. On the basis of the above pleadings, issues were raised by the trial court. The evidence consists of the testimony of P.Ws.1 and 2 and documents marked as Exts.A1 to A10 from the side of the plaintiffs. The defendants did not adduce any oral evidence but marked Exts.B1 to B5. The lower court on an evaluation of the evidence came to the conclusion that the document of title deposited by defendants 2 and 3 before the first defendant Bank is concocted and fabricated one. But the court went on to hold that encumbrance certificate and tax receipts deposited were sufficient to create an equitable mortgage and held that the mortgage created in favour of the first defendant is valid. Accordingly, the suit was dismissed. 

5. During the pendency of this appeal, the first defendant Bank was taken over by Punjab National Bank and they were brought on the party array.

6. Learned counsel for the appellants contended that the decree of the court below is clearly unsustainable both on facts and in law. The clear finding was to the effect that the document of title deposited by the second defendant was concocted and fabricated one and if that is so, there is no justification in finding that the mortgage is a valid one. The court below was not justified in coming to the conclusion that merely by producing the encumbrance certificate and tax receipts, an equitable mortgage could be created. It may be true that the document of title as such need not be deposited to create an equitable mortgage. But documents showing evidence of title along with the other documents will have to be deposited to create a valid equitable mortgage. In the case on hand, the encumbrance certificate and tax receipts alone are produced and they are insufficient to show title to the suit property. According to the learned counsel, the reliance placed on by the court below of the decision reported in Anju Pillai v. M.S.M.Kasiviswanathan Chettiar (AIR 1974 Madras 16) is incorrect. Drawing attention to the evidence of P.W.1, it was pointed out that his evidence is to the effect that the document of title deposited with the first defendant is a fraudulent one. According to learned counsel the decree passed by the court below cannot be sustained. 

7. No arguments were addressed by the learned counsel appearing for the first defendant Bank in this appeal. 

8. The question that arises for consideration is whether there is valid equitable mortgage created by the second defendant in favour of the first defendant by producing the encumbrance certificate and the tax receipts. 

9. Section 58(f) of the Transfer of Property Act defines a 'mortgage by deposit of title deeds'. It reads as follows: 

"58(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." 

10. Mortgage by deposit of title deeds is also known as equitable mortgage. It is well settled that in order to create a mortgage by deposit of title deeds, it is not necessary that there should be a registered deed. The requisites necessary for a 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 debt may be an existing debt or a future debt. If on the other hand, the mortgage is created by an instrument in writing, then it needs to be registered as per law. 

11. The lower court relied on the decision reported in Anju Pillai's case (supra). It is true that in the said decision it was held that even if the document of title as such is not deposited, a valid equitable mortgage can be created. In the said case, the documents deposited were (i) the hundi towards the purchase price; (ii) the agreement by the previous owner to convey the property, (iii) tax receipt in the name of the plaintiff's father. It has been held that merely by depositing tax receipts and plan which are not documents of title, an equitable mortgage is not created. A mortgage deed, lease deed etc., may be sufficient and deposit of which are sufficient to constitute evidence of title to create an equitable mortgage. It is also settled that if the original document is lost, a certified copy of document of title will be sufficient, but it is necessary to show that the original is lost. 

12. The evidence of P.W.1 in the case on hand shows that the document of title said to have been deposited by the second defendant is a fraudulent one, the question arises is whether the other two documents are sufficient to create fraudulent mortgage.

13. The court below has given detailed reasons and has discussed the evidence of P.W.1 to come to the conclusion that the document of title said to have been deposited by the second defendant is a fraudulent document. The evidence also shows that the prior document of title has been produced by the plaintiffs and so also the assignment deeds in their favour. 

14. In fact, the court below in paragraph 13 of its judgment goes on to hold that the court below had no hesitation to take the view that creation of mortgage without valid title deed is not valid. However, the court below then goes on to hold that the mortgage created by deposit of encumbrance certificate and tax receipts in favour of the first defendant Bank is a valid one. 

15. It is difficult to support the view of the court below that Exts. B2 and B3 are sufficient to create a valid equitable mortgage. While it is true that deposit of document of title as such may not be necessary to create a valid equitable mortgage, it is well settled that some documents showing existing title must be produced to create a valid equitable mortgage. In the decision reported in Chidambaram Chettiar v. Aziz Meah (AIR 1938 Rangoon 149) it was held as follows: 

"In order to create a valid mortgage by deposit of title deeds under S.58(f), it is not necessary that the whole, or even the most material, of the documents of title to the property should be deposited, nor that the documents deposited should show a complete or good title in the depositor. It is sufficient if the deeds deposited bona fide relate to the property or are material evidence of title, or are shown to have been deposited with the intention of creating a security thereon." 

16. In the decision reported in Syndicate Bank v. Modern Tile and Clay Works (1980 K.L.T. 550), it was held as follows: 

"9 . The stand taken by the contesting respondents however is that the deposit in this case being of a copy of a kanom deed and not of the original kanom deed there has not been a deposit of title deeds and therefore no equitable mortgage is created. The question to be considered is whether a registration copy of a kanom deed is a document of title for purposes of an equitable mortgage. By "documents of title" we mean the legal instruments which prove the right of a person in a particular property. Evidence supplied by documents may in some cases be conclusive while in other cases it may be insufficient in proving the title or the right claimed. When a person who is acclaimed and recognised by law as the owner of property transfers his rights by an instrument which satisfies all the requirements of law, the instrument of transfer is a title deed in respect of the property so far as the transferee is concerned. The document may amount to conclusive proof of such transfer. On the other hand a document may be of such a kind that it tends to prove such transfer of right but is not conclusive of a transfer of ownership. Thus a receipt for payment of revenue may not be conclusive proof of the ownership of the person in whose name it is issued even though the liability to pay revenue is on the owner. This is because in practice revenue is received by the concerned authorities from a person even without an enquiry whether he is the owner of the property. A revenue receipt is therefore insufficient evidence to prove title to property and is therefore not by itself a document of title.  

10. When a property owned by Government is transferred to an individual and a patta is issued to him, the patta so issued may be a document of title. That does not mean that a patta issued to an owner is always a document of title as is seen from what follow-: A who is the owner of a property, transfers it to B by a deed of transfer. The transferee may move the revenue authorities for a change of registry in the revenue records and a patta may be issued to him. The patta in such cases is only a document showing the person who is liable to pay the revenue of the property. It is only an evidence of title, the document of title being the deed of transfer that A issued to B. The right of a person who lends money on the deposit of the patta may get defeated if another claims security over the same land by proving that the deed of transfer had been deposited with him by way of equitable mortgage. A parity of reasoning applies in the case of a copy of deed of transfer. A copy of a deed of transfer is not ordinarily a document of title for the purposes of an equitable mortgage. It is only evidence of title. It is the original deed of transfer that is the document of title. This is because the rules for the issue of copies permit the obtaining of copies by an owner even while he is in possession of the original document of title. To hold that a copy of a deed of transfer is also a document of title for purposes of S.58(f) of the Transfer of Property Act would amount to giving facilities to the owner to misuse the provision. He may get an advance from one person by delivering the original document of title and then use the copy of the document for getting an advance from some other person who may not be aware of the earlier equitable mortgage. It should be the policy of law to see that such contingencies are avoided. At the same time there may be cases where the original document is lost and there are no chances of that document being made use of for any purpose. In the absence of the original deed of transfer the next best evidence of the owner's title to the property is a certified copy of that document. A certified copy in such cases may with sufficient safeguards be received as a document of title. The essential pre-requisite for the use of a certified copy as a document of title is the loss of the original deed. Unless and until it is made out that the original is lost, a certified copy of a document cannot be considered to be a document of title for the purpose of S.58(f) of the Transfer of Property Act. 

11 . Decisions on equitable mortgages where documents other than the original deed of transfer are deposited by way of security have to be appreciated in the light of the above principles. In Jit Singh Sabedar v. Punjab and Sind Bank AIR. 1935 Lah. 640, the original award which formed the document of title having been filed in Court and a decree obtained, was not available for the purpose of deposit by way of equitable mortgage. It was held that an equitable mortgage created by deposit of a copy of the award was valid. In Punjab and Sind Bank v. Firm Ganesh Das, AIR. 1935 Lah. 721, deposit of a copy of a jamabandi was held to be insufficient to constitute an equitable mortgage because a jamabandi was nothing more than Government record prepared for the purpose of collection of revenue. Such a document may be presumptive evidence of title but not a document of title. It was also held that in the absence of proof that the original document of title was lost, no equitable mortgage could be created by deposit of a copy of the title deed. In (Firm) Jowala Das v. Thakor Das, AIR. 1936 Lah. 251, a distinction was made between documents creating title and documents evidencing title and it was held that an equitable mortgage could be validly created only by deposit of documents of the former character. Deposit of a copy of the jamabandi was held to be insufficient for creating a mortgage. See also Jivan Das v. Peoples Bank, AIR. 1937 Lah. 926. In Mrs. Stewart v. Bank of Upper India,34 1C. 937, it was held that "title deeds include copies of deeds where the originals are not forth-coming". A similar view was taken in Surendra Mohan v. Mohendranath, AIR. 1932 Cal. 590, also. 

12. In the instant case Ext. A5 the affidavit produced by defendants 2 to 4 clearly makes out that the original documents of title were not available. It was on the above representation that the" copy of the kanom deed was accepted by the Bank. There is no case for the contesting respondents that they or anybody else are in possession of the original documents. Therefore the case that the equitable mortgage is bad for failure to deposit the original title deeds cannot be accepted. 

17. In the decision reported in Assiamma v. State Bank of Mysore (ILR 1990(2) Kerala 43) it was held as follows: 

"..............In this connection, learned counsel for the appellant heavily relied on Section 58(f) of the Transfer of Property Act which reads as follows: 

".....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." 

It is not disputed that the deposit was made in a town specified by notification by the State Government. What is argued by learned counsel for 2nd defendant is that Clause (f) of section 58 of the Act contemplates only deposit of documents of original title to immovable properties and not copies thereof. In this case, it is not disputed that it was only registration copies of the documents of title of immovable property, which were deposited by 2nd defendant in the Bank........ Since properties were gifted to other persons also thereunder, only one of the donees would be able to keep the original and the other donees had to be satisfied with a registration copy of the document............According to learned counsel for 2nd defendant, deposit of the above documents was not sufficient to create an equitable mortgage, as the original document of title deed was not among the documents of title deposited. In support of is contention, learned counsel relied on a decision of a Division Bench of this court in Syndicate Bank v. Modern Tile and Clay works. In that case Janaki Amma, J. speaking for the Bench said as follows:  

"By 'document of title' we mean the legal instruments which prove the right of a person the right of a person in a particular property. Evidence supplied by documents may in some cases be conclusive while in other cases it may be insufficient in proving the tile or the right claimed. When a person who is acclaimed and recognised by law as the owner of property transfers his right by an instrument which satisfies all the requires of law, the instrument of transfer is a title deed in respect of the property so far as the transferee is concerned. The document may amount of conclusive proof of such transfer. On the other hand a document may be of such a kind that it tends to prove such transfer of right but is not conclusive of a transfer of ownership. Thus a receipt for payment of revenue may not be conclusive proof of the ownership of the person in whose name it is issued even though the liability to pay revenue is on the owner. This is because in practice revenue is received by the concerned authorities from a person even without an enquiry whether he is the owner of the property. A revenue receipt is therefore insufficient evidence to prove title to property and is therefore not by itself a document of title..............A party of reasoning applies in the case of a copy of deed of transfer. A copy of a deed of transfer is not ordinarily a document of title for the purposes of an equitable mortgage. It is the original deed of transfer that is is the document of title. This is because the rules for the issue of copies permit the obtaining of copies by an owner even while he is in possession of the original document of title. To hold that a copy of a deed of transfer is also a document of title for purposes of section 58(f) of the Transfer of Property Act would amount to giving facilities to the owner to misuse the provision. He may get an advance from one person by delivering the original document of title and then use the copy of the document for getting an advance from some other who may not be aware of the earlier equitable mortgage. It should be the policy of law to see that such contingencies are avoided. At the same time there may be cases where the original document is lost and there are no chances of that document being made use of for any purpose. In the absence of the original deed of transfer the next best evidence of the owner's title to the property is a certified copy of that document. A certified copy in such cases may with sufficient safeguards be received as a document of title. The essential pre-requisite for the use of a certified copy as a document of title is the loss of the original deed. Unless and until it is made out that the original is lost, a certified copy of a document cannot be considered to be a document of title for the purpose of Section 58(f) of the Transfer of Property Act..................... 

In the latter decision, a Division Bench of the Calcutta High Court made the following observations: 

"It is sufficient if the deeds deposited bona fide relating to the property are material evidence of title and are shown to have been deposited with the intention of creating a charge. ... As regards attested copies, there is no clear decision but it seems that an attested copy would not be enough unless, perhaps, there is proof of the original not being available." 

After referring to the observations in ...........to the effect that what the terms "documents of title" and "title deeds" denote is that such a document or documents as show a prima facie or apparent title in the depositor or some interests therein, quoted with approval the following passage from the judgment. 

"If the form of the documents of title that have been delivered to the creditor is such that from the deposit of such documents alone the court would be entitled to conclude that the documents were deposited with the intention of creating a security for the repayment of the debt, prima facie a mortgage by deposit of title deeds would be proved; although, of course, such an inference would not be irrebutable, and would not be drawn if the weight of the evidence as a whole told against it." 

After reviewing the relevant decision on the subject Supreme Court finally held that: 

"A Court will have to ascertain in each case whether in substance there is delivery of title- deeds by the debtor to the creditor. If the creditor was already in possession of the title deeds it would be hyper-technical to insist upon the formality of the creditor delivering the title deeds to the debtor and the debtor re-delivering 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." 

A Full bench of the Rangoon High Court considered the question in ............. Justice Dunkley, who delivered the main judgment observed as follows: 

"In our opinion the correct statement of the law is that in order to create a valid mortgage by deposit of title deeds under section 58(f), T.P.Act, it is not necessary that the whole, or even the most material of the documents of title to the property should be deposited, nor that he documents deposited should show a complete or good title in the deposition. It is sufficient if the deeds deposited bona fide relate to the property or are material evidence of title are shown to have been deposited with the intention of creating a security thereon." 

Roberts, C.J. agreed with the main judgment and Mya Bu, J. added as follows: 

"The documents enumerated in my learned brother's judgment, in my opinion, show prima facie or apparent title of the mortgagors to the land covered by those documents. The grant shows that the original owner of the property was the mortgaors' vendor. The certificate of transfer shows the factum of the transfer having taken place about 14 years before the alleged mortgage. Although it is not a valid document of conveyance, yet it is useful as showing that a transfer as a matter of fact had taken place. Then there were tax tickets or revenue receipts, which showed that during the years that elapsed between the transfer and the alleged mortgage the mortgagors were paying the revenue as persons who owned the land ...........In these circumstances, in my opinion, the documents enumerated in my learned brother's judgment are sufficient to show that there was prima facie title in the mortgagors to the property mentioned in the documents." 

The same question came up for consideration of a Division Bench of the Madras High Court in Angu Pillai v. M.S.M. Kasiviswanathan Chettiar............ held that it was not necessary that the whole, or even the most material of the documents of title to the property should be deposited; nor that the documents deposited should show a complete or good title in the depositor and it is sufficient if the deeds deposited bona fide relate to the property or are material evidence of title or are shown to have been deposited with the intention of creating a security thereon In an earlier decision in Dohganna v. Jammanna the Madras High Court has taken the same view. 

In the instant case, registration copy of the title deed Ext.A19, tax receipts Exts.A21 and A21 (a) and the certificate issued by the President of Kumbala Panchayat Ext.A22 to the effect that door Nos. referred to therein are situated in Sy. Nis. 119/5 and 113/7 of Koipady village clearly establish the title of the 2nd defendant to the properties in Sy. Nos.119/5 and 113/7 of Koipadi village covered by Ext.A19. The intention of the appellant to create an equitable mortgage in respect of those properties was confirmed by the 2nd defendant in Ext.A17 in clear and unambiguous terms. In our view, this is sufficient to constitute an equitable mortgage by the 2nd defendant in favour of the Bank in respect of right of 2nd defendant in properties in schedule F to Ext.A19. It is evident from the correspondence  between the 2nd defendant and the Bank that the 2nd defendant had made it clear to the Bank that the original title deed was not available with her as properties were gifted to her mother, brothers and sisters also thereunder. It was impossible for all the donees in such circumstances to possess the original deed." 

18. In the decision reported in K.J.Nathan v. S.V. Maruthi Rao (AIR 1965 SC 430), it was held as follows: 

"The foregoing discussion may be summarized thus: Under the Transfer of Property Act a mortgage by deposit of title-deeds is one of the forms of mortgages whereunder there it a transfer of interest in specific immoveable 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 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 S. 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 hyper-technical 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." 

19. From the above decisions, it is very clear that even though it may not be necessary to deposit the title deeds as such in order to create a valid mortgage, documents, which prima facie prove evidence of title must be deposited with the mortgageee. Therefore it is essential that in order to create a valid equitable mortgage by deposit of title deeds, some documents showing the evidence of title must be deposited with the mortgagee. The encumbrance certificate or certificate from the Village Officer do not show the title to the suit property at all. The essence of the transaction is that the title deed deposited shall be security for the debt. It is sufficient if the deeds deposited bona fide relate to the property or are any material evidence of title and are shown to have been deposited with an intention to create a security thereon. The essence of the transaction is that the deposit of title deeds shall be with the intention to create a security for the debt. 

20. Applying the law as laid down in the various decisions referred to above, and on perusing the evidence adduced in the case, it is difficult to accept the finding of the court below that on production of Exts.B2 and B3 and the deposit of the same with the Bank, a valid mortgage is created. In the result, this appeal is allowed, the judgment and decree passed by the court below are set aside and a decree is passed in the following terms:

i) The first defendant is restrained by a permanent prohibitory injunction in proceeding against the plaint schedule properties on the basis of the equitable mortgage created by the second defendant and also in pursuance to the decree obtained in O.S.567 of 1992 of Sub Court, Ernakulam. The appellants are entitled to costs both in this court as well as before the court below. 

P. BHAVADASAN, JUDGE sb.