Retaintion of original title deeds by the bank

This query is : Resolved 

08 December 2011

i have been discharged by the court as a gurantor but still bank is not ready to release our title deeds of a property saying that

" you have been discharged as a gurantor but not as a mortgauger, and they hold a recovery certificate against the principal borrower, so under the provision of law, the bank can encash my property to recover their dues from the principal borrowers."

It is important to note that I havn't mortgauged the said property as it was just simple deposit of title deeds at a branch of the bank which is situated at Panvel (which is not a notified area under section
58(f) , transfer of property act 1882 and till today bank hasn't registered any motgauge deed or created any charge on it.
As I understand, once a gurantor is discharged by the court, he or she no more remains continuing as a mortgauger for their property.
I need few clearifications on the issue as under.
(1) Can the bank encash my property under the
circumstances mentioned above, even if I am discharged as a gurantor and never mortgauged my property.(it was just a simple deposit of title deeds of my property in a non-notified area's branch of the bank, which was not registered by the bank)
(2) Is it lawfully correct whatever bank says? (i.e.a gurantor needs to get discharged in both way , as a gurantor and as a mortgauger seperately and specifically)
(3) Do I need to approach the court for rectification of the order? (which in fact I would like to avoid as it costs a lot)

Guest (Expert)
08 December 2011

If you were merely a guarantor, how the question of being a mortgager arises. Before resorting to any legal action, it is better you start correspondemce with the bank to release your title deed of the property. Let them reply what they want to say and why?

ashwin kamdar (Querist)
08 December 2011

I have already approached the bank repeatedly asking for my title deeds (6 to 7 times within last 14 months from the date of order)

Initially they replied ( in writting) saying that they would be challanging the order by filing writ pitition
which till today they havn't done so.( after 14 months from the date of the order passed by Div. Jt. Registrar, Mumbai)

Now,recently when I sent a reminder asking for my title deeds, they replied in writting as stated in my quary that

"We (i.e. the bank) can not realese your title deeds as you are liable to pay as a mortgager, since court has discharged you as a gurantor and not as a mortgager"

ajay sethiOnline (Expert)
08 December 2011

you have deposited title deeds of your property . you have created equitable mortgage on your property .
maybe on basis of the fact that you have created equitable mortgage on your property hte bank is not releasing your title deeds .

why did you give title deeds of your property?
was it as guarantor?
if you have given title deeds as gurantor if you have been discharged as gurantor bank ought to release your title deeds . if bank is refusing to return move the court for necessary reliefs

Rajeev Kumar (Expert)
08 December 2011

Agree with experts

rajeev sharmaOnline (Expert)
08 December 2011

it is not worth relying that u deposited ur property document without any purpose. No expert openion may be given without going through the title documents executed u with the bank.

ashwin kamdar (Querist)
08 December 2011

It was just a simple deposit of title deeds as gurantors. As far as I know, "simple deposit of title deeds amount to eqitable mortgage only if the same is being deposited in a notified area declared by the state or central govt. authorituies (i.e. in Mumbai,its Registrar's Office)(under transfer of property act, section 58(f),1882)

My conclusion is that the property belongs to me and not to the principal borrower. As I am being discharged by the court as a gurantor, bank can not hold my document.

My question is that why bank has not encashed my property for more than 8 years before the order was passed in my favour if my property was mortgaged to them.

Bank has already encashed few other properties of the principal borrower and other gurantors which were mortaged to them during the same period in a
proper way much before the order in my favour was passed.

It is a matter of common sense that any bank or financial institution would encash and liquidate the assets they hold from the borrower or its gurantors to recover their dues, only if their holding is lawful and legally they are permited by the law to do so.

In my case the bank did not liquidate my property because it was not mortgaged to them.( under sec 58(f) of transfer of property act 1882)

Friends, I do appreciate your response and thanks all of you.

Please let me know if my conclusion is lawfully correct or incorrect.

ajay sethiOnline (Expert)
08 December 2011

your conclusion appears to be correct . if you have been discharged as gurantor bank is bound to return your original documents of property .

Shonee KapoorOnline (Expert)
08 December 2011

Agreed with Ld. Sethi.


Shonee Kapoor

vasant kulkarni (Expert)
08 December 2011


R.Ramachandran (Expert)
08 December 2011

Dear Mr. Ashwin,
There is some missing link.
Please indicate the following:
(1)Whether the original borrower has discharged his liability to the bank?
(2)On what basis/grounds the Div. Jt. Registrar, Mumbai discharged you from the liability.
(3) If Panvel is not within the notified area, how come Div.Jt. Registrar Mumbai has jurisdiction to decide the matter?

I am not agreeable to your conclusion that just because the bank has not liquidated your property so far, does not in any way prove that the property had not been mortgaged to the bank.

Advocate. Arunagiri (Expert)
08 December 2011

On what ground you are relieved as guarantor?

Whether you have mentioned in the pleadings regarding the deposit of title deed?

Whether you have pleaded to return your documents also?

Devajyoti BarmanOnline (Expert)
08 December 2011

Yes agreed.

prabhakar singh (Expert)
08 December 2011

i too agree.

ashwin kamdar (Querist)
08 December 2011

Dear Mr. R Ramchandran

Answers to missing links

(1) Original Borrower is not discharged and re-covery certificate has been already issued against him.

(2) I was discharged from liabilities as a gurantor on the basis of fraud which was commited between the bank's officials and the principal borrower.
The orders passed by both Asst. Registrar and Div. Jt. Registrar (in the rivision application fieled by the bank against the order passed by the Asst. Registrar) are speaking orders and clearly states that

"The act of the bank's officials amounts to fraud and gurantors can not be held liable and are discharged"

Jt. Div. Registrar dismissed bank's rivision application and agreed with the order passed by the Asst.Registrar.

(3) Title deeds were deposited with the bank at their Panvel Branch as the principal borrower had his account with Panvel Branch. ( I have the acknowledgement from their Panvel Branch towards the deposit of title deeds)
As the bank has its head office in Mumbai, they filed re-covery suit before Asst. Registrar (being a
co-operative bank), and that is how the rivision application was before Dy. Jt. Registrar Mumbai

My conclusion is merely not on the basis that the bank failed to liquidate my property timely. I am aware that bank has no limitations in terms of time to liquidate mortgaged assets, but how would you justify application of sec.58(f) of transfer of property act 1882 as the title deeds were deposited at Panvel Branch (which is not a notified area)andundr the provision simple deposit of title deeds doesn'tamount to equitable mortgage.It was pleaded before Dy. Jt.Registrarabouttitledeeds were deposited at Panvel Branch which is not a notified area and does not amount to
equitable mortgage under the provision of sec58(f) of transfer of property act 1882.

This contention was in reply to one of the bank's contentions claiming equitable mortgage against simple deposit of title deeds.

Secondly it was not pleaded to return our documents as we prayed to dismis bank's rivision application which they filed against Asst. Registrar's order, seeking re-covery certificate against us.

Is it necessary that I should have also pleaded specifically to return my documents apart from seeking discharge as a gurantor?

Raj Kumar MakkadOnline (Expert)
09 December 2011

I think much has already been opined which seems already a big problem for the author to read and derive its meaning for his action.

RAJU O.F., (Expert)
09 December 2011

Simple deposit of title deeds in the bank, by the owner, with an intention to secure the property, for a loan granted, or to be granted, would constitute a charge over the property under equitable mortgage, which is a previlege available to bankers. Hence, if the court did not discharge full of your liability to the bank, then the bank is justified in keeping the title documents under the EM for enforcing the mortgage right by bringing the property for sales. You have to secure an Order from the competent court discharging you from all liability to the bank and also directing the bank to return the title documents to you.

Surendra Gupta (Expert)
09 December 2011

I agree fully with the views of Shri Raju O F. Personal Guarantee covers all your assets (including the Property equitably mortgaged with the bank). As the court has discharged you as a Guarantor, the bank cannot proceed against you to recover its dues by attaching your assets other than the property equitably mortgaged. However, the bank is fully entitled to retain your property equitably mortgaged by you. The bank can act at any time within the limitation period which is 12 years from the cause of action. You have no other option but to obtain fresh orders from the court directing the bank to release your property.

ashwin kamdar (Querist)
10 December 2011

I don't understand why don't you consider section 58(f) of transfer of property act?

Simple deposit of title deeds amounts to eqitable mortgage only if deposited with the bank in "NOTIFIED AREA "

The law is very clear and transparent, but I am not aware if any ammendments or Supreme Court 's Judgement supersedes section 58(f) .

Please let me know if it is so.

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