The concept of Mortgage by deposit of title deeds is unique and seemingly simple as compared to the other kinds. Here, the debtor just delivers to the creditor the documents i.e., the title-deeds of immovable property with intent to create a security.

Mortgage was a well-established mode for taking a loan since ancient times. In the Roman legal system, it was known as fiducia cum creditore, in which the property was transferred from the debtor to his creditor. Similarly, in ancient Hindu law, the word Adhi was used to denote pledge of movable property or mortgage of immovable property. However, it was only in the Transfer of Property Act, 1882(hereinafter referred to as “the Act”) that this mode was codified in India under Section 58 and the Judiciary since then had constructively and more actively tackled this concept. Under the said Section, a Mortgage is further classified into different kinds and this is based on the “nature of interest” which is transferred to secure the loan. The classifications include simple mortgage, usufructuary mortgage, conditional mortgage, English mortgage, mortgage by deposit of title deeds and anomalous mortgages. The article at hand will be specifically dealing with ‘Mortgage by deposit of title-deeds’ which is provided for under Section 58(f) of the Act and understand the Judiciary’s approach on this kind mortgage by examining the various case laws and the stances taken by the Courts. 

In Hari Sankar vs. Kedar Nath, 66 I. A. 184 the title deeds were deposited accompanied by a memorandum when part of the advance arranged for was made. Some days later when the balance was advanced, another memorandum was delivered superseding the earlier one, and this was a formal document stating the essential terms of the transaction “hereby agreed” and referred to the moneys “hereby secured.” It also conferred an express power of sale on the mortgagee. Lord Macmillan, after reviewing the earlier decisions of the Board, held that the document required registration, observing

“where, as here, the parties professing to create a mortgage by a deposit of title deeds contemporaneously enter into a contractual agreement in writing, which is made an integral part the transaction, and is itself an operative instrument and not merely evidential, such a document must, under the statute, be registered.”

It is clear, that if the parties did not intend thereby to create the charge. The document purports only to record a transaction which had been concluded and under which the rights and liabilities had been orally agreed upon. No doubt it was taken by the respondents to show that the title deeds of the appellant’s properties were deposited with them as security for the moneys advanced by them, and to obviate a possible plea that the deeds were left with them for other purposes, as indeed was contended by the appellant in his written statement, taking advantage of the non-registration of the memorandum in question. But that is far from intending to reduce the bargain to writing and make the document the basis of the rights and liabilities of the parties. In agreement with the High Court, we are of opinion, that the memorandum delivered by the appellant along with the title deeds deposited with the respondents did not require registration and was properly admitted in Evidence to prove the creation of the charge.

When borrower and the creditor choose to reduce a contract in writing as the sole evidence of terms between them, It since becoming integral part of the transaction, shall require registration under Section 17 of the Registration Act.

When borrower and the creditor choose to reduce a contract in writing as the sole evidence of terms between them, It since becoming integral part of the transaction, shall require registration under Section 17 of the Registration Act.

Mortgage by deposit of title deeds whether requires compulsory registration

The above discussion came up in the wake of question as to whether ‘charge’ of mortgage can be entered in the revenue record in respect of a mortgage effected by deposit of title-deeds without its registration and payment of registration fee and stamp duty.

In the case of mortgage by deposit of title-deeds the immovable property is handed to the creditor by the borrower and documents stands as security. Entire transaction may be recorded in a memorandum but such memorandum would not be construed as an instrument of mortgage but merely evidential and thus not requiring registration, unless the memorandum includes terms and conditions pertaining to deposit in the form of a document, creates right, liability or extinguishes, which will require registration under Section 17(1)(c) of the Registration Act. Thus what is to be understood is that a document merely recording a transaction which is already concluded and which does not create any rights and liabilities do not require registration.

As in the instant case[1], the original deeds were deposited with the bank, the charge of mortgage can be entered into revenue record in respect of mortgage by deposit of title deeds and for that, instrument of mortgage is not necessary. Since mortgage by deposit of title-deeds does not require registration, no payment towards registration fee and stamp duty is necessary.

Deposit of Title Deed is creating a charge on the property by handing over the title deeds of the property by its owner to the lender and orally confirming of handing over the title needs for the intent to create a charge on the property for the amount borrowed.


[1] State of Haryana & Ors. vs. Navir Singh and Anr. (Delhi HC, 07.10.2013)

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