Equitable mortgage by deposit of title deeds need not be registered, and later security can be validly supported by forbearance to sue.

A memorandum merely recording an equitable mortgage by deposit of title deeds was not a compulsorily registrable instrument because the mortgage had already been completed by the deposit itself; registration is required only where the written document is the contract creating the charge and the sole evidence of the transaction. The Delhi HC therefore rejected the objection based on non-registration. It also held that later security furnished after default was supported by valid consideration, since forbearance to sue is sufficient consideration under contract law. The challenge to the interim orders failed, and the respondent's rights under the security were upheld for interlocutory purposes.

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Issues: (i) Whether a memorandum recording deposit of title deeds for an equitable mortgage required registration; (ii) whether the subsequent creation of security was void for want of consideration.

Issue (i): Whether a memorandum recording deposit of title deeds for an equitable mortgage required registration.

Analysis: A mortgage by deposit of title deeds falls within Section 58(f) of the Transfer of Property Act, 1882 and does not require a registered instrument under Section 59 of that Act. Registration is attracted only where the parties reduce the mortgage bargain into a written instrument which itself operates as the contract creating the charge and becomes the sole evidence of the transaction. On the facts, the document of 10.03.1997 was only a memorandum evidencing an already completed deposit of title deeds, supported by a contemporaneous letter confirming deposit of the title deeds as security.

Conclusion: The document did not require registration and the objection based on the Registration Act, 1908 failed.

Issue (ii): Whether the subsequent creation of security was void for want of consideration.

Analysis: Under Section 127 of the Indian Contract Act, 1872, consideration for a guarantee may consist of anything done or any promise made for the benefit of the principal debtor. The record showed that the borrower had defaulted, a recovery notice had been issued, and the petitioner's security was furnished thereafter in the context of forbearance to sue. Forbearance to sue constitutes valid consideration, and the later security could not be treated as a naked promise unsupported by consideration.

Conclusion: The security was supported by valid consideration and was enforceable.

Final Conclusion: The challenge to the interim orders failed, and the petition was dismissed with the respondent's rights under the security upheld for the purposes of the interlocutory proceedings.

Ratio Decidendi: A memorandum that merely records an equitable mortgage by deposit of title deeds is not itself a compulsorily registrable instrument, and a subsequent security given in the context of forbearance to sue is supported by valid consideration.

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