In Brief
A person borrowed Rs. 10 lakhs from a lender in 1995, secured by registered mortgages and promissory notes. When the borrower defaulted, the parties executed an agreement in 2000 whereby the borrower deposited the title deeds of his property (valued at Rs. 9 lakhs) as security for the outstanding debt of Rs. 11 lakhs. The lender sued for a mortgage decree. The trial court found an equitable mortgage by deposit of title deeds was created and decreed the suit. The High Court's Division Bench reversed this, holding no mortgage was proved. The Supreme Court restored the trial court's judgment, holding that Section 58(f) of the Transfer of Property Act allows mortgages by deposit of title deeds when the debtor intends the documents to be security. The borrower's unsupported plea of coercion could not defeat the mortgage. The Court reduced the interest rate from 36% to 12% per annum in the interest of justice.
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