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CS Professional · Drafting, Pleadings and Appearances · Drafting of Agreements, Deeds and Documents

Anita Exports, based in Kolkata, deposits title-deeds of its warehouse with Eastern Finance for a loan of Rs 25,00,000, intending to create security. Eastern Finance asks its counsel whether a registered, attested instrument is needed to make this mortgage valid. What is the correct position?

The deposit of title-deeds with intent to create security is enough. Section 59 requires a registered, attested instrument for mortgages of one hundred rupees or more but specifically excludes a mortgage by deposit of title-deeds.

  1. ARegistration is compulsory because the sum exceeds Rs 100
  2. BTwo attesting witnesses are compulsory in every mortgage
  3. CThe deposit itself is enough; the registered-instrument requirement of section 59 excludes a mortgage by deposit of title-deedsCorrect
  4. DOnly a notarised affidavit can validate it

Explanation

Section 59 requires a registered, attested instrument for mortgages of Rs 100 or more but expressly carves out a mortgage by deposit of title-deeds. Kolkata (Calcutta) is a listed town, so delivery with intent to secure suffices. Option one ignores this exception.

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