However, Section 59 of the Transfer of Property Act mandates that every mortgage other than a mortgage by deposit of title-deeds can be effected only by a registered instrument. In the face of it, in our opinion, when the debtor deposits with the creditor title-deeds of the property for the purpose of security, it becomes mortgage in terms of Section 58(f) of the Transfer of Property Act and no registered instrument is required under Section 59 thereof as in other classes of mortgage.
The essence of mortgage by deposit of title-deeds is handing over by a borrower to the creditor title-deeds of immovable property with the intention that those documents shall constitute security, enabling the creditor to recover the money lent. After the deposit of the title-deeds the creditor and borrower may record the transaction in a memorandum but such a memorandum would not be an instrument of mortgage. A memorandum reducing other terms and conditions with regard to the deposit in the form of a document, however, shall require registration under Section 17(1)(c) of the Registration Act, but in a case in which such a document does not incorporate any term and condition, it is merely evidential and does not require registration."
[Extracted from: State of Haryana v Narvir Singh (2014) 1 SCC 105]
Understanding Mortgage by Deposit of Title-Deeds
A mortgage by deposit of title-deeds is a specific type of mortgage where the borrower hands over the original documents (title-deeds) of their immovable property to the lender. This is done with the clear intention of creating a security for the loan granted. The provided text explains that this method is recognized under Section 58(f) of the Transfer of Property Act.
Application of Provisions under Section 96 of the Transfer of Property Act
The question asks about the application of provisions related to other mortgage types to a mortgage by deposit of title-deeds, specifically under Section 96 of the Transfer of Property Act.
Section 96 of the Transfer of Property Act, 1882, states that the rules and regulations that apply to a simple mortgage shall, as far as possible, apply to a mortgage created by the deposit of title-deeds.
Therefore, the provisions which apply to a simple mortgage are extended to mortgages by deposit of title-deeds under this section. This means that the lender, in case of default, can sue the borrower for the mortgage money, similar to how they would proceed in a simple mortgage.
Key Distinctions Mentioned in the Text
- The core of a mortgage by deposit of title-deeds is the physical delivery of the title documents to the creditor to secure the loan.
- While the parties might create a memorandum documenting the transaction, such a memorandum is not the mortgage itself unless it contains specific terms and conditions.
- If the memorandum includes terms and conditions, it might require registration under the Registration Act, but the act of depositing title-deeds itself creates the mortgage without needing a registered instrument, distinguishing it from other mortgage types as per Section 59 of the Transfer of Property Act.
Conclusion
Based on Section 96 of the Transfer of Property Act, the legal provisions applicable to a simple mortgage are extended to mortgages created by the deposit of title-deeds. This ensures a legal framework for lenders and borrowers involved in such transactions.
The correct option is:
- A simple mortgage.
Similar Questions
- In a mortgage by deposit of title-deeds, after the deposit of the title-deeds, if the creditor and the borrower choose to record their transaction in a memorandum reducing other terms and conditions (in addition to what flow from the mortgage by deposit of title-deeds) with regard to the deposit in the form of a memorandum/document, then the memorandum/document requires registration under section 17(1)(c) of the Registration Act. In this context which among the following propositions is not correct?
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- Which of the following is NOT a leading judgement on section 74 of the Indian Contract Act:
- Section 28 of the Indian Contract Act is subject to __________ appended to it:
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Important Questions from Legal Aptitude
- In a mortgage by deposit of title-deeds, after the deposit of the title-deeds, if the creditor and the borrower choose to record their transaction in a memorandum reducing other terms and conditions (in addition to what flow from the mortgage by deposit of title-deeds) with regard to the deposit in the form of a memorandum/document, then the memorandum/document requires registration under section 17(1)(c) of the Registration Act. In this context which among the following propositions is not correct?
- The Supreme Court's final decision on the appeal filed by M/s. Balaji Traders was to:
- In which of the following cases, the Supreme Court read down the word "adult male" in Section 2(q) of the Protection of Women from Domestic Violence Act, 2005?
- The Supreme Court emphasized that the expression "extinguishment of any right therein" is of wide import. What does this expression cover?
- Which of the following is NOT a leading judgement on section 74 of the Indian Contract Act:
