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Creation of Equitable Mortgage by Title Received via Relationship Certificate - Main points and insights:
Deposit of Title Deeds as Security: Multiple sources confirm that depositing title deeds can constitute an equitable mortgage if done with the intent to create security. For example, ["Geetaben Nareshbhai Shah vs Mashreq Bank Ltd. - Debt Recovery Appellate Tribunal"] states, the allotment letter, the share certificate and the records from the society indicating the exclusive title...were produced before the bank with the intent to create a mortgage. Similarly, ["Geetaben Nareshbhai Shah vs Mashreq Bank Ltd. - Debt Recovery Appellate Tribunal"] notes, the mortgage by deposit of title deeds in favour of the bank was created till a mortgage deed was executed, implying that deposit alone can create an equitable mortgage if accompanied by the intent.
Intent to Create Security: A recurring theme is that deposit of title deeds alone is insufficient unless accompanied by clear intent. For instance, ["Ananthakrishnan VS K. G. Rangasamy - Madras"] emphasizes, the intention to create the mortgage is a question of fact, and that mere deposit of copy of the title deed...would create a valid equitable mortgage in the absence of any document evidencing such deposit is with intention to create an equitable mortgage.
Evidence of Title: Some judgments clarify that some evidence of existing title must be produced. ["Biju Paul VS Nedungadi Bank Ltd. - Kerala"] states, some documents showing existing title must be produced to create a valid equitable mortgage, and the deposit of encumbrance certificates or tax receipts alone may be insufficient.
Deposit of Copy of Title Deed: Several cases, such as ["DEENADAYALAN Vs N. SATHISH KUMAR, - Madras"], discuss whether depositing a copy of the title deed suffices. The consensus is that in absence of explicit evidence or intention, mere deposit of a copy does not automatically establish an equitable mortgage.
Legal vs. Equitable Mortgage: In some contexts, deposit of title deeds is considered a legal mortgage (["IND2"] and others), but generally, in Indian law, deposit with the intention to create security can form an equitable mortgage.
Analysis and Conclusion:
Creating an equitable mortgage by receiving title through a relationship certificate depends heavily on the presence of clear, demonstrable intent to create security. Depositing a relationship certificate alone, without explicit intent or supporting documentation showing a security purpose, is unlikely to suffice.
Evidence such as a formal agreement, acknowledgment of debt, or explicit declaration of intent strengthens the case for an equitable mortgage.
Case law indicates that the deposit of title deeds or copies thereof, coupled with the intention to create security, can constitute an equitable mortgage. However, mere receipt of a relationship certificate without accompanying evidence or intent is generally insufficient.
Therefore, it is possible to create an equitable mortgage through a relationship certificate if it is accompanied by clear intent to secure a debt and relevant evidence of title, but the relationship certificate alone typically does not suffice.
References:
In the world of property financing, equitable mortgages offer a quick way to secure loans without lengthy registration processes. But what if your title documents come from a relationship certificate rather than originals? Many borrowers and lenders wonder: can I create an equitable mortgage by a title received to me by virtue of a relationship certificate?
This question touches on key principles under Section 58(f) of the Transfer of Property Act, 1882 (TPA). Generally, courts focus on intent and bona fide deposit over the form of documents. This post breaks down the legal landscape, drawing from judicial precedents, to help you understand when such a mortgage may hold up.
Note: This is general information based on case law and not specific legal advice. Consult a qualified lawyer for your situation.
An equitable mortgage arises when a debtor deposits title deeds with a creditor as security for a debt, without a formal registered deed. Under Section 58(f) TPA, this must occur in specified 'notified towns' (like major cities listed by the state government). Key requisites include:
The Supreme Court and High Courts emphasize that the requisites of an equitable mortgage by deposit of title deeds are: (i) There must be a debt; (ii) Delivery must be by a debtor... S. Kasthuri VS S. Arivukkarasu - 2024 Supreme(Mad) 1034S. Kasthuri VS S. Thirumaran - 2024 Supreme(Mad) 119
Traditionally, original title deeds are preferred, but courts have clarified that copies can suffice if the deposit is bona fide and intent is proven. The main legal finding is: Creating an equitable mortgage by deposit of title deeds or related documents is valid when there is a genuine intention to create security over immovable property, supported by the deposit of relevant documents that evidence the title or interest in the property. The form in which the documents are received—original or copy—does not necessarily invalidate the creation of an equitable mortgage, provided the deposit is bona fide and with the intent to create security. Assiamma VS State Bank Of Mysore - 1989 0 Supreme(Ker) 505SAIDALAVI VS CHALAPURAM BANK LTD. - 1963 0 Supreme(Ker) 94
For instance:- Deposit of copies, especially when originals are unavailable, can create a valid equitable mortgage if intent is clear. Assiamma VS State Bank Of Mysore - 1989 0 Supreme(Ker) 505SAIDALAVI VS CHALAPURAM BANK LTD. - 1963 0 Supreme(Ker) 94- Documents showing 'prima facie or apparent title, or material evidence of title' are sufficient, per Supreme Court rulings. Assiamma VS State Bank Of Mysore - 1989 0 Supreme(Ker) 505
A relationship certificate—often proving heirship or relational title—may qualify as 'material evidence' if accompanied by supporting docs like encumbrance certificates or tax receipts.
Courts repeatedly stress: The intent of the parties at the time of deposit is crucial, and physical possession of original documents is not always mandatory. Assiamma VS State Bank Of Mysore - 1989 0 Supreme(Ker) 505SAIDALAVI VS CHALAPURAM BANK LTD. - 1963 0 Supreme(Ker) 94
The Rangoon High Court held: 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. SAIDALAVI VS CHALAPURAM BANK LTD. - 1963 0 Supreme(Ker) 94
Similarly, the Calcutta High Court noted: a certified copy of a deed of transfer... may be received as a document of title when the original is lost. SAIDALAVI VS CHALAPURAM BANK LTD. - 1963 0 Supreme(Ker) 94
Without clear intent—evidenced by memos, correspondence, or conduct—the deposit fails. Mere tentative offers won't do. Assiamma VS State Bank Of Mysore - 1989 0 Supreme(Ker) 505
In Assiamma VS State Bank Of Mysore - 1989 0 Supreme(Ker) 505, the court upheld an equitable mortgage via copies, citing unavailability of originals and strong intent evidence. It referenced Supreme Court authority in SAIDALAVI VS CHALAPURAM BANK LTD. - 1963 0 Supreme(Ker) 94, affirming copies as valid security.
Not all cases succeed. In S. Kasthuri VS S. Arivukkarasu - 2024 Supreme(Mad) 1034, the plaintiff lost because they couldn't prove deposit in a notified area: The court established that for an equitable mortgage by deposit of title deeds to be valid, the deposit must occur in a notified area as specified in Section 58(f). Failure to establish location and intent led to dismissal.
Similarly, S. Kasthuri VS S. Thirumaran - 2024 Supreme(Mad) 119 dismissed a suit for lacking proof of execution in a notified area and delayed filing, raising genuineness doubts.
On copies without intent proof: Whether the mere deposit of copy of the title deed by Srikantiaya would create a valid equitable mortgage in the absence of any document evidencing such deposit is with intention to create an equitable mortgage? Courts answered no. DEENADAYALAN Vs N. SATHISH KUMAR,Deenadayalan VS N. Sathish Kumar Rep. by his General Power of Attorney N. Ashok Kumar - 2021 Supreme(Mad) 973Deenadayalan VS N. Sathish Kumar - 2021 Supreme(Mad) 1113
Xerox copies were questioned in agricultural land disputes, but upheld only with strong evidence. Deenadayalan VS N. Sathish Kumar Rep. by his General Power of Attorney N. Ashok Kumar - 2021 Supreme(Mad) 973
In family disputes, oral partitions or unregistered arrangements complicate title via relationship certificates. Deenadayalan VS N. Sathish Kumar - 2021 Supreme(Mad) 1113
To strengthen your position:- Pair deposits (originals or copies) with a memorandum of deposit stating intent.- Use certified copies if originals are unavailable, plus encumbrance certificates, tax receipts.- Ensure deposit in a notified town; document location via affidavits or witnesses.- Maintain records of debt, communications, and conduct proving security intent.- For relationship-based titles, corroborate with succession docs or heirship proofs.
Assiamma VS State Bank Of Mysore - 1989 0 Supreme(Ker) 505 advises: When creating an equitable mortgage, ensure that the deposit of documents—original or copies—is accompanied by clear documentation or correspondence indicating the intent to create security.
In conclusion, while originals are ideal, judicial trends favor flexibility for practical realities. However, success hinges on robust evidence. For tailored guidance, seek professional legal counsel to navigate these nuances effectively.
References:1. Assiamma VS State Bank Of Mysore - 1989 0 Supreme(Ker) 505: Validity via copies and intent.2. SAIDALAVI VS CHALAPURAM BANK LTD. - 1963 0 Supreme(Ker) 94: Deposit of copies as sufficient.3. Other cases as cited inline.
#EquitableMortgage #TitleDeeds #PropertyLawIndia
The Appellant contends that she has not created any security in favour of the bank by depositing the title deeds of the subject property with the intent to create an equitable mortgage. ... and create a mortgage was estopped from challenging the mortgageable title of the mortgagor. ... The allotment letter, the share certificate and the records from the society indicating the exclusive title of Nimesh Shah the mortgagor, were produced before the bank with the intent to create....
The Appellant contends that she has not created any security in favour of the bank by depositing the title deeds of the subject property with the intent to create an equitable mortgage. ... and create a mortgage was estopped from challenging the mortgageable title of the mortgagor. ... The allotment letter, the share certificate and the records from the society indicating the exclusive title of Nimesh Shah the mortgagor, were produced before the bank with the intent to create....
With these traditional remedies unavailable, Deutsche Bank resorts to a more inventive contractual theory: that certain covenants in the mortgage agreement create separate contractual obligations binding Lisa to the mortgage covenants. ... - 18 - relationship to Dunkin. We do not see, nor has Deutsche Bank attempted to explain, how a standard mortgage arrangement requires a degree of confidence and trust beyond that inherent in a typical contractual rel....
The first defendant with an intention to create an equitable mortgage over the suit schedule properties, made deposit of title deed at the plaintiff's residence in Karaikal. ... KR.L.Lakshmanan Chettiar and anr., this Court issued guidelines for equitable mortgages as follows:- “(9) The requisites of an equitable mortgage by deposit of title deeds are: (i) There must be a debt; (ii) Delivery must be by a debtor ... On verification of encumbrance certificate, the plain....
The first defendant with an intention to create an equitable mortgage over the suit schedule properties, made deposit of title deed at the plaintiff's residence in Karaikal. ... KR.L.Lakshmanan Chettiar and anr., this Court issued guidelines for equitable mortgages as follows:- “(9) The requisites of an equitable mortgage by deposit of title deeds are: (i) There must be a debt; p align="justify ... On verification of encumbrance certificate#H....
As is evident from the above extract, in line with trade practice, it appears that the MoDT is in respect of an equitable mortgage. An equitable mortgage is created by handing over the title deeds of the property concerned as security for an obligation with intention to create a mortgage. ... an Equitable Mortgage for securing the repayment of Rs. 50,00,000/- (Rupees Fifty Lakhs only) availed to Mr. ... The petitioner has not stated, on affidavit or ....
Whether the mere deposit of copy of the title deed by Srikantiaya would create a valid equitable mortgage in the absence of any document evidencing such deposit is with intention to create an equitable mortgage?” ... ii)Whether the mere deposit copy of the title deed by L.Srikantiah would create a valid equitable mortgage in the absence of any document evidencing such deposit is with intention to create an #HL_ST....
Srikantiah would create a valid equitable mortgage in the absence of any document evidencing such deposit is with intention to create an equitable mortgage? ... Srikantiah would create a valid equitable mortgage in the absence of any document evidencing such deposit is with intention to create an equitable mortgage? ... Srikantiah would create a valid ....
Whether the mere deposit of copy of the title deed by Srikantiaya would create a valid equitable mortgage in the absence of any document evidencing such deposit is with intention to create an equitable mortgage?” ... (ii) Whether the mere deposit copy of the title deed by L.Srikantiah would create a valid equitable mortgage in the absence of any document evidencing such deposit is with intention to create an #HL_S....
It is contended that the equitable mortgage, created on 1.7.2015 when the State had a charge over the properties, is void and non-est by operation of Section 37 read with Section 38 of Kerala Value Added Tax Act,2003. ... The contention of the petitioner is that the revenue recovery proceedings were initiated much after the equitable mortgage was created and that the mortgagee has a prior charge over the property. Reliance is placed on the decisions of this Court in Kuriachan Chacko Vs. State of Kerala & Ors. ... It is f....
13. Mr. Rohit Agarwal, learned counsel appeared on behalf of the Respondent No.2 and submitted that the subject of the present writ petition is a inter se dispute between the petitioner and the respondent no.1. Hence, the writ petition filed under Articles 226 and 227 of the Constitution of India is not maintainable. He submitted that the respondent no.2’s ownership and the possessory rights qua the property cannot be decided in the writ petition arising out of DRAT proceedings in which the respondent no.2 was never a party. He relied upon the judgment of Supreme Court in case of Roshina T. ....
In order to overcome difficulties of delay in realising dues, through a long process of litigation in the Courts, the Securitization Act has come into force which has the approval of highest Court of the land. This may lead to serious consequences i.e. innocent public believing that the property is not encumbered may acquire interest in such property by parting with their money. Many a time the creation of equitable mortgage by deposit of title deeds do not get reflected in the encumbrance certificate obtained from the Sub-Registrar’s Office unless such mortgage is followed by a re....
In order to overcome difficulties of delay in realizing dues, through a long process of litigation in the Courts, the Securitization Act has come into force which has the approval of highest Court of the land. Many a time the creation of equitable mortgage by deposit of title deeds do not get reflected in the encumbrance certificate obtained from the Sub-Registrar's Office unless such mortgage is followed by a registered memoranda. This may lead to serious consequences i.e. innocent public believing that the property is not encumbered may acquire interest in such property b....
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