Equitable mortgage by deposit of title deeds is valid without registration, and mutation in favour of the bank must be recorded.

Mortgage by deposit of title deeds under Section 58(f) of the Transfer of Property Act is created by depositing the title deeds with the intention to secure a debt, and the transaction is complete on deposit itself without execution of a registered mortgage deed. A later memorandum, if any, is only evidentiary and does not itself create the mortgage. Because the mortgage arises from deposit and not from a written instrument, compulsory registration and stamp duty provisions do not apply, and the relevant notification and administrative instructions were held not to cover this form of equitable mortgage. The mutation in favour of the bank was therefore required to be recorded.

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Issues: Whether a mortgage by deposit of title deeds creates an equitable mortgage without execution of a registered instrument, and whether a mutation entry in favour of the bank can be made without treating such transaction as compulsorily registrable under the Registration Act and the Stamp law.

Analysis: Mortgage by deposit of title deeds under Section 58(f) of the Transfer of Property Act, 1882 is created by the act of depositing title deeds with an intention to secure the debt. The transaction is complete by deposit itself and does not depend upon execution of a mortgage deed. A later memorandum, if any, is only a record of the transaction and does not itself create the mortgage. Since the mortgage arises from deposit of title deeds and not from a written instrument, the provisions relating to compulsory registration and stamp duty do not apply to such a transaction. The notification and administrative instructions relied upon were held not to cover this form of equitable mortgage.

Conclusion: The equitable mortgage by deposit of title deeds was valid without registration, and the authorities were bound to record the mutation in favour of the bank.

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