Property, Loan, Creation of Valid Mortgage : How Law Impacts the Transactions
In an interesting case, the law related to mortgage was discussed.
In Allahabad Bank v. Ley Bros [2010] GCtR 6260 (Kerala), it was held that "for the creation of an equitable mortgage, three conditions are required, i.e., (1) There should be a deed, (2) Deposit of title deeds and (3) An intention that the deed should be a security for the debt. It is not necessary that the mortgage should be created by a registered document. The very act of deposit of title deeds with the intention to provide the property as a security is sufficient to constitute equitable mortgage."
It is not necessary that the equitable mortgage by deposit of title deeds is created only by a registered deed. Going by S.58 (f) of the Transfer of Property Act, 1882 the very act of deposit of title deeds with the intention to furnish security for a debt is sufficient to create a mortgage.
It was also held that an equitable mortgage is created by deposit of title deeds and if that be so, they are mandatorily registrable.
No doubt, an agreement to create a mortgage is not compulsorily registrable, but if by the document, a mortgage is created, then, registration is mandatory.