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

Meera Textiles Pvt Ltd, located in Mumbai, hands over the original title-deeds of its factory land to Bank of Kalyan with the intention of creating security for a term loan of Rs 50,00,000. No mortgage deed is written. Under the Transfer of Property Act, 1882, what is this transaction called?

It is a mortgage by deposit of title-deeds. A person in a specified town such as Bombay delivers documents of title to a creditor with intent to create security, which is exactly how section 58(f) defines this form of mortgage.

  1. ASimple mortgage
  2. BMortgage by deposit of title-deedsCorrect
  3. CEnglish mortgage
  4. DUsufructuary mortgage

Explanation

Section 58(f) describes a person in a specified town (Calcutta, Madras, Bombay or a notified town) delivering documents of title to a creditor or his agent with intent to create security. Mumbai (Bombay) is a listed town. A simple mortgage requires the mortgagor to bind himself personally and does not rest on delivery of title documents; an English mortgage needs absolute transfer with a re-transfer proviso.

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