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

Ramesh Traders, a firm in Mumbai, delivers the title-deeds of its godown to Western Bank Ltd with intent to create a security for a cash credit limit, without executing any written mortgage instrument. Under the Transfer of Property Act, 1882, how is this transaction classified?

It is a mortgage by deposit of title-deeds. Delivering title documents of immoveable property to a creditor, with intent to create security, in a specified town such as Bombay, constitutes this form of mortgage under section 58(f), even without a written instrument.

  1. AMortgage by deposit of title-deedsCorrect
  2. BSimple mortgage
  3. CEnglish mortgage
  4. DUsufructuary mortgage

Explanation

Section 58(f) describes a mortgage by deposit of title-deeds: a person in a specified town (Calcutta, Madras, Bombay or a notified town) delivers documents of title to a creditor with intent to create security. Mumbai (Bombay) is a named town. A simple mortgage requires a personal covenant and sale right without delivery of possession, and no possession or re-transfer is involved here.

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