equitable mortgage - definition


 Which act of India defines equitable mortgage?  Please quote any judgement (SC/HC) which defined equitable mortgage.  In one of Sub-registrar's offices in Bangalore, the official did not agree equitable mortgage is mortgage by deposit of title deeds.  The matter in question was of stamp duty.  He wanted the memorandum intended to be registered must be titled as "Memorandum of Deposit of Title Deeds" and not as "Memorandum of Equitable Mortgage".  

 
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Advocate

The Transfer of Property  Act 1882

Section 58 ( f )   Mortgage by deposit of Title  Deeds ;-

 
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Advocate

Shri.Rao, has mentioned the provisions. Equitable mortgage on immovanle property can be created by a written deed.The deed would provide that the mortgagor has deposited the title-deeds of his property with the mortgagee bank  and required stamp duty under the Indian stamp Act and is required to be registered under the Indian registration Act. See the case of United Bank of India Ltd vs Lekharam & Sonaram & Co. AIR 1965 S.C.1591.


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Thank you Mr. Rao.  Unfortunately, the Act does not use the words 'equitable mortgage'.  Though I knew deposit of title deeds to create security is creation of equitable mortgage, I was at loss of wit to convince this to one of Sub-registrar who was adament to collect stamp duty applicable to mortgages other than equitable mortgage (in Karnataka it is 0.50% of the consideration for other mortgages and 0.25% in case of equitable mortgage by deposit of title deeds).  So, I wanted to show / cite him a SC/HC judgement where equitable mortgage is explained as mortgage by deposit of title deeds.

 
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Advocate

It is true that there is no mention of Equitabel Mortgage in the Section 58 of TP Act , but in india Equitabel Mortgage is treated as Mortgage by deposit of Title Deeds, after dposit the next day ,  followed by a memorandum recording the deposit of title deeds and the said  Memorandum  of deposait of title Dededs is required to be registered as suggested by Mr Assumi  Advocate ! The Stamp duty & Regstration Feee is  deferign form state to state !  In AP a Proforma  is beign used by the SRO and the same is beign followed by Banks !

 

 
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Whether a document can be a mortgage deed as well as agreement to sell. For example, if time limit is fixed for repayment of loan amount (mortgage with possession interest and rent being equal) with a stipulation that on failure of the mortgagor repaying the loan amount by the date fixed, the deal be treated as an agreement to sell at such price.

 

Whether such an agreement to sell is specifically enforceable?

 
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It is general rule ,"Once a mortgage always a mortgage, nothing but a mortgage." This means that no condition in the mortgage deed can defeat mortgagor's right of redemption. So, even on expiry of the date of payment of mortgage money, mortgagor has right to redeem his property after payment of mortgage-money.The condition which provides that the mortgage shall be converted to sale is a Clog on Redemption and is, therefore void.

Thus, such agreement to sell is not enforceable.

 
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But if the mortgager dies leaving behind legal heirs who have no connection with the loan?

e.g.the mortgager has two sons and one daughter.The mortgager  mortgaged the property for a bank loan of one son only, and died inbetween. Will the other daughter and son not be able to claim their rights to 

the property?But right to property is a fundemental right and they have inherited the property in natural course.

 
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Originally posted by :Partha Bhattacharyya
"
But if the mortgager dies leaving behind legal heirs who have no connection with the loan?

e.g.the mortgager has two sons and one daughter.The mortgager  mortgaged the property for a bank loan of one son only, and died inbetween. Will the other daughter and son not be able to claim their rights to 

the property?But right to property is a fundemental right and they have inherited the property in natural course.
"
 
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sir my qustion is that in case of equitable mortgage if the mortgage is done first on the basis of agreement to sale and later after loan disburement is sale deed is executed whether mortgage is valid

 
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