VENKATAHAMIAH, J. ( 1 ) THE above case Arises out of a reference made by the Chief Controlling revenue Authority under S. 54 of the Mysore Stamp Act, 1957, (hereinafter referred to as the Act ). The question for consideration in this case is whether a document addressed by Mjs Murugharajendra Co. for and on behalf of itself and Sri Shankara Textile Mills Ltd. Davangere (hereinafter referred to as the mortgagors) in favour of the Manager, State Bank of Mysore (hereinafter referred to as the mortgagee) is liable for stamp duty under Art. 6 of the Schedule of the Act. ( 2 ) THE facts leading to the above reference are these: the mortgagors had borrowed from the mortgagee a sum of Rs. Six lakhs under an equitable mortgage dt. 10-10-1960 In that connection they had deposited with the mortgagee, the title deeds relating to certain immovable properties. In January 1965, the mortgagor approached the mortgagee to advance an additional sum of Rs. Five lakhs under an equitable mortgage on the security of the title deeds already deposited by them under the first mortgage. The mortgagee having agreed to advance the sum the mortgagors got a resolution passed on 29-1-1965 of the Board of Directors of Sri Shankara Textile Mills Ltd. authorising its Managing Agents M/s murugharajendra Co. to borrow an additional sum of Rs. Five lakhs under an equitable mortgage on the security of the title deeds already deposited with the mortgagee under the first mortgage. On 30-1-1965 they wrote a letter to the mortgagee which reads as follows : we, M/s Murugharajendra Co. , a registered firm, the duly appointed Managing Agents of Sree Shankara Textiles Mills Ltd. Davangere, as agreed upon in person and being duly authorised by resolution No. (10) iii passed by the Board of Directors of the Co. on 29-1-1965, true copy whereof is enclosed herewith, have deposited this day (the title deeds is enclosed hereto, have deposited this day), the title deeds relating to the fixed assets of the said Company, consisting of lands, buildings and installed machinery , as per list enclosed to the memorandum of mortgage by deposit of title deeds, for the repayment of Rs. Six lakhs with interest thereon, executed by us on 10-10-1960, and agreed that your bank may continue to hold the said title deeds as security by way of equitable mortgage for the due repayment on demand with interest at 3i per cent more than the Reserve Bank of india rate with a minimum of 81/2 per cent of the additional sums further advanced and to be advanced to the extent of Rs. Five lakhs. List of title deeds : for Sree Shankara Textile Mills, for Murugharajendra Company, sd|. Partner, managing Agents. After the above letter was written, the Registrar of Companies was requested to register the mortgage u/s. 125 of the Companies Act. Along with the documents filed before him, a copy of the letter dt. 30-1-1965 exrtacted above was also filed. On going through the said letter, the Registrar of Companies, being of the opinion that the letter was liable for stamp duty under Art. 6 of the Act, impounded the same and forwarded it to the deputy Commissioner, Chitradurga, for recovery of duty and penalty. ( 3 ) THE Deputy Commissioner in his turn referred the matter to the Asst. Commissioner, Davangere. The Asst. Commissioner having felt doubt as to the stamp duty with which the document was chargeable, drew up a statement of the case and referred it with his own opinion for the decision of the Chief Controlling Revenue Authority under S. 53 (2) of the Act the Chief Controlling Revenue Authority held that the document was liable to stamp duty under Art. 6 of the Act, as according to him the document was an instrument evidencing an agreement relating to the deposit of title deeds. Thereafter, the Assistant Commissioner intimated the Registrar of Companies that stamp duty of Rs. 2,025 together with a penalty of Rs. 10 was recoverable from the mortgagors. The mortgagors having credited, under protest, the duty and penalty referred to above, filed a writ petition in WP. No. 1585 of 1967 on the file of this Court questioning the correctness of the above order. This Court by its order passed in the writ petition, directed the Chief Controlling Revenue Authority to make a reference under S. 54 (l) of the Act. Pursuant to the said direction, the Chief Controlling Revenue Authority has made the above reference. No. 1585 of 1967 on the file of this Court questioning the correctness of the above order. This Court by its order passed in the writ petition, directed the Chief Controlling Revenue Authority to make a reference under S. 54 (l) of the Act. Pursuant to the said direction, the Chief Controlling Revenue Authority has made the above reference. ( 4 ) THE contention of the mortgagors before us was that the document in question was not changeable to duty under Art. 6 of the Schedule to the act as it was not an instrument evidencing an, agreement relating to a mortgage by deposit of title deeds, but it was only a letter containing a reference to a completed mortgage by deposit of title deeds. It was argued that it was not the intentnon of the parties that the letter in question should be considered as the sole repository of the terms of the equitable mortgage, but in fact the mortgage had been completed by the delivery of the title deeds to the mortgagee. ( 5 ) THE expression instrument is defined in S. 2 (1) (j) of the Act as follows: "instrument" includes every document by which any right or liability is, or purports to be, created transferred, limited, extended, extinguished or recorded. " the manner in which a mortgage by deposit of title deeds can be created has been explained by the Supreme Court in United Bank of India ltd. v. M s. Lekharam Sonaram and Co. AIR. 1965 SC. 1591 as follows : a mortgage by deposit of title deeds is a form of mortgage recognised by S. 58 (1) of the Transfer or Property Act which provides that it may be effected in certain towns (including Calcutta) where a person delivers to a creditor or his agent' documents of title to immoveable property with intent to create a security thereon; in other words, when the debtor deposits with the creditor title deeds of his property with an intent to create a security the law implies a contract between the parties to create a mortgage and no registered instrument is required under S . 59 as in other classes of mortgage. 59 as in other classes of mortgage. ( 6 ) IT is essential to bear in mind that the essence of a mortgage by deposit of title deeds is the actual handing over by a borrower to the lender of documents of title to immoveable property with the intention that those documents shall constitute a security which will enable the creditor ultimately to recover the money which he has lent. But if the parties choose to reduce the contract to writing, this implication of law is excluded by their express bargain, and the document will be the sole evidence of its terms. In such a case the deposit and the document both form integral parts of the transaction and are essential ingredients in the creation of the mortgage. It follows that in such a case the document which constitutes the bargain regarding security requires registration under S. 17 of the Indian registration Act, 1908, as a non-testamentary instrument creating an interest in immoveable property, where the value of such property is one hundred rupees and upwards. If a document of this character is not registered it cannot be used in the evidence at all and the transaction itself cannot be proved by oral evidence either. ( 7 ) IT is clear from the opinion of the Supreme Court extracted above that a mortgage by deposit of title deeds can be creataed by handing over the title deeds by the borrower to the lender with the intention that these documents shall cpnstitute the security for the debt. But if the parties choose to reduce the contract to writing, that document alone would be the sole evidence of its terms. In the latter case, the document shall have to be treated as an instrument creating a right in favour of the mortgagee to recover the loan from the properties to which the title deeds relate. Such an instrument requires to be registered under S. 17 of the Registration Act, as a non-testamentary instrument creating an interest of the value of rs. 100 and upwards in immovable property. It would also become liable for stamp duty unde Art. 6 of the Schedule to the Act. Hence, the essential factor which determines whether a document is one by which an equitable mortgage is created is the intention of the parties. 100 and upwards in immovable property. It would also become liable for stamp duty unde Art. 6 of the Schedule to the Act. Hence, the essential factor which determines whether a document is one by which an equitable mortgage is created is the intention of the parties. The existence or otherwise of such intention can be established either by the documents produced by the parties or by oral evidence of by both. ( 8 ) WE shall now proceed to consider whether the parties intended to create an equitable mortgage by the letter dt. 30-1-1965 or whether the said letter is a mere record of an equitable mortgage which had already been created by delivery of title deeds. On going through the said letter which is extracted above, we feel that it is not happily worded. There are one or two grammatical mistakes also in it. A fair reading of the letter shows that there was no physical delivery of title deeds by the mortgagors to the mortgagee on 30-1-1965 with the intention of creating an equitable mortgage. What was actually done was that the title deeds which were already in the possession of the mortgagee under the earlier mortgage for rupees six lakhs, were acknowledged by both the parties as being held by the mortgagee as security for the additional sum of Rupees five lakhs lent on 30-1-1965. It has to be presumed that in the instant case, there has been constructive delivery of title deeds on 30-1-1965, though not actual, and such constructive delivery is sufficient in the eye of law to conclude an equitable mortgage. The above view receives support from the following passage extracted from the decision of the Supreme Court in k. J. Nathan v. S. V. Maruthi Rao and others AIR. 1965 SC. 430. "the decision in Whitbread Ex-Parte, (1812) 34 ER. 496 throws some light on the legal requirements of delivery of title deeds. There, the petitioner claimed a lien, as an equitable mortgage, by deposit in 1808 of the lease of a public-house as a collateral security for 1000, lent to the lessee on his promissory note, and a subsequent advance of 100 made in January 1810. One of the points mooted was whether the subsequent advance of 100 was also charged on the property covered by the document. The learned Chancellor in that context made the following observation. One of the points mooted was whether the subsequent advance of 100 was also charged on the property covered by the document. The learned Chancellor in that context made the following observation. If the original bargain did not look to future advances, no subsequent advance can be a charge, unless the subsequent transaction is equivalent to a re-delivery of the deed, receiving it back as a security for both sums, that will do; as it cannot depend upon that mere form; but I shall require them to swear expressly, that when the sum of 100 was advanced, it was upon the security of the deposit. " ( 9 ) THE said observations emphasise the substance of the transaction rather than the form. It implies that a debtor, who has: already effected a mortgage by deposit of title-deeds in respect of an earlier advance, need not go through the formality of receiving back the said documents from the creditor and formally re-delivering them to the creditor as security for further advances taken by him. It would comply with the requirements of law if there was clear evidence that the documents already deposited with the creditor would also be charged by way of deposit of title-deeds in respect of the further advances. The doctrine accepted by this decision may for convenience of reference, be described as the doctrine of constructive delivery. Learned counsel for the respondent attempted to confine the scope of this decision to a case of further advances on the basis of documents already deposited with the creditor in respect of earlier advances. It is true that the principle was enunciated in the context of the said facts, but is of wider application. In our view, the same principle will have to be invoked wherever documents of title have already been in the possession of creditor at the time when the debtor seeks to create a mortgage by deposit of title-deeds. . . . . . We, therefore, hold that there was constructive delivery of title deeds which were already in the possession of the mortgagee as security for the additional loan of Rupees five lakhs. ( 10 ) THE next question is whether the parties intended that the document dated 30-1-1965 should be considered as the sole evidence of the equitable mortgage. The document refers to an earlier oral agreement when it recites "as agreed upon in person. ( 10 ) THE next question is whether the parties intended that the document dated 30-1-1965 should be considered as the sole evidence of the equitable mortgage. The document refers to an earlier oral agreement when it recites "as agreed upon in person. Later on it refers to a deposit of title deeds already made when it recites "have deposited this day the title deeds. and an earlier agreement regarding the loan and the rate of interest payable thereon when it recites " (have) agreed that your bank may continue to hold the said title deeds as security by way of equitable mortgage for the due payment on demand with interest. . . . . The document does not state that an equitable mortgage was being created by the execution of the same by the mortgagors. It is in the nature of a record of what had been done earlier by the constructive delivery of title-deeds with the intention to create an equitable mortgage. ( 11 ) IN obla Sundarachariar v. Nalayana Ayyar AIR. 1931 PC. 36. , the Privy Council was concerned with a document almost similar to the one in question in this case. The facts of that case are these: A person in Madras gave a promissory note and on the same day gave a memorandum which containtained a list of the title deeds with the introductory words "as agreed upon in person, I have delivered to you the under-mentioned documents as security. " the Privy Council was of the view that the memorandum was only 3 written record of the particulars of the deeds which were the subject of an agreement constituted in fact by the act of deposit and the payment of the money and that it neither purported nor operated to create or declare any right, title or interest in the property included in the deeds with the result that it did not require registration. The Privy Council took the said view notwithstanding the fact that there was a condition that the loan had to be given only after the said memorandum was delivered to the mortgagee. It was held that the memorandum remained a list of the documents deposited and nothing more. The Privy Council took the said view notwithstanding the fact that there was a condition that the loan had to be given only after the said memorandum was delivered to the mortgagee. It was held that the memorandum remained a list of the documents deposited and nothing more. The above view of the Privy Council has been approved by the Supreme Court in the case of United Bank of India limited (1) and is followed by this Court in rajamma v. Mahant P. Krishnanandagiri Gowuamy 1973 (2) Mys. L. J. 73. ( 12 ) BUT it was argued by Sri M. P. Chandrakanta Raj Urs, learned Govemment advocate, relying upon the resolution of the Board of Directors of Sree Shankara Textile Mills Limited that the parties intended to con elude the bargain by the execution of a document and that the letter dated 30-1-1965 was the said document. The relevant part of the resolution reads as follows:-"it was further resolved to give an undertaking to the said Bank, undertaking to, execute a regular mortgage deed in respect there of on the requisite stamp paper and get the same executed under Company's seal and in conformity with the Company's Articles of Association and get the same registered as and when the said Bank demands. We do not think that the learned Government Advocate is right in his contention. The portion of the resolution extracted above only states that as and when the mortgagee demands, a regular mortgage deed could be executed. There was no such demand made by the mortgagee in this case. In any event the letter dated 30-1-1965 cannot be considered as tne regular mortgage which the parties intended to execute. The resolution was only intended to clothe the Managing Agents of the Company to conclude the loan transaction and, if necessary, to execute a formed deed. The resolution however did not prohibit the conclusion of the deal without the execution of a formal deed, if it was possible to do so. " ( 13 ) WE, therefore, hold that the letter dated 30-1-1965 was not intended by the mortgagees to be the sole repository of the terms of the equitable mortgage, but it was only a letter containing an acknowledgement of an already concluded equitable mortgage. It is, therefore, not an instrument by which any right or liability was created in respect of immoveable property. It is, therefore, not an instrument by which any right or liability was created in respect of immoveable property. In the result, we hold that the document dated 30-1-1965 is not an instrument evidencing an agreement relating to deposit of title deeds and is not liable for stamp duty under Art. 6 of the Schedule to the Mysore stamp Act, 1957. --- *** ---