Equitable mortgage by deposit of title deeds
dheepak srinivasa
(Querist) 07 February 2012
This query is : Resolved
I have deposited money in a finance company and the finance company did not pay interest and principal when approached they gave me land documents in the name of the finance company to reassure me that principal and interest will be paid
1. Now since they didnt repay I have institutated a money suit and have shown this documents as deposit of title deeds which is a equitable mortgage. But I have depositED all the FDs in original with the court along with the last interest payment reciepts but I have not deposited the land documents original in the court but have detailed the description in my plaint/PETITION. DO I HAVE TO DEPOSIT THE ORIGINAL LAND DOCUMENT IN THE COURT OR NOT???? SO FAR THE COURT HAS NOT ASKED IT BUT DURING THE CROSS TODAY THE OTHERSIDE COUNSEL PUT A QUESTION WHY I HAVE NOT DEPOSITED THE ORIGINAL LAND DOCUMENTS.Do I have to deposit as per law???
2. The high court has also ruled that the finance company has depsited the title deeds to me therefore further attachments is not required. But based on this rulinng from the high court can I create an encumbarance in the registrar office of property ( for a equitable mortgage/deposit of title deeds)??? I just dont want the finance company to sell this off. because now there is no encumbarance as the court has admitted this as only a deposit of title deeds by the finance company to me. how should I protect my interest? can the finance company sell of the property without my knowledge as this court order will not be refected in the Encumbarance?
ajay sethi
(Expert) 07 February 2012
when you file your affidavit of evidence along with compilation of documents you have to deposit all the original documents . only if original document is not in your posession or it is lost can you file xerox copies and lead secondary evidence of the same .
if title deeds have been depsoited with you finance company cannot sell the land . as all purchasers will want the originals
R.Ramachandran
(Expert) 08 February 2012
There is a catch here.
The finance company may very well approach the Sub-Registrar's office and obtained a certified copy - a second original - on the plea that they had lost the original.
In that event, they can sell the property to some gullible buyer - while the person having the original title deeds will only retain the title deeds while the property already stands transferred to some other third party.
Therefore, one has to obtain a restraint order from the Court restraining the finance company from alienating, parting with or creating any third party rights. If that happens, then lis pendes will apply to any subsequent transaction in the property even if the finance company does something behind the back of the querist. Otherwise, the querist can be taken for a ride by the Finance Company!
Swagat Mohanty
(Expert) 10 February 2012
Only handing over the title documents not necessarily construe equitable mortgage.
M V Gupta
(Expert) 11 February 2012
As stated by Shri.Ajay Sethi, u have to file the original documents of title along with ur affidavit of evidence. If u have not filed them so far, better file them now with permission of the Court. But the ten dollar question is whether the delivery of the title deeds by the Company simplicitor will be a valid mortgage by deposit of title deeds. u will have to prove that the delivery was with intent to create a mortgage to secure the amounts due and payable to u. Otherwise ur contention that a mortgage by deposit of tile deeds was created in ur favor may not be accepted by the Court.
RAJU O.F.,
(Expert) 12 February 2012
EM cannot be created in the name of an individual by deposit of title deeds. It is a privilege available to banks and financial institutions. By adducing evidence you may get right over the property. If any court had passed any order attaching the property in your favour, get such entry attachment recorded in the sub-registry.
M V Gupta
(Expert) 12 February 2012
Dear Mr. Raju, How do u say that e. mortgage cannot be created in favor of an individual?Pl see Sec. 58(f) of the TP Act. It does not contain any restriction as pointed out by you. Only restriction is that the deposit should be made at a places specified or notified by the State Govt.
