1. Legal Position - Section 58(f) Transfer of Property Act, 1882

Mortgage by deposit of title deeds is created when:

Debtor voluntarily delivers documents of title to immovable property with intent to create security thereon in a notified town, without any written instrument.

Supreme Court has repeatedly held: Production of title deeds as security towards debt amounts to creation of equitable mortgage under Sec 58(f) TPA.

What are "documents of title"?
Legal instruments which prove right of a person in particular property - Sale Deed, Partition Deed, Gift Deed, not Jamabandi, Tax Receipt, Mutation entry.

Core Rule: To create valid equitable mortgage, you must deposit original document of title. Deposit of a mere certified copy of Jamabandi entry cannot constitute equitable mortgage.

2. When Certified Copy is Accepted - 3 Exceptions

Banks accept certified copy only in these cases:

Exception A - Original Lost / Destroyed / Not Available

Exception B - Original is in Court / Probate / Award - Cannot be taken out

Exception C - Multiple owners, one original, multiple loans - Eg Co-operative flat share certificate

In all exceptions, intention to create security is prime factor, not mere possession of paper.

3. Detailed Case Laws

CASE 1: C. Assiamma v. State Bank of Mysore, AIR 1990 Ker 157 = 1992 74 Comp Cas 139 - The Foundation Case

Facts: Mortgagor deposited registration copy of title deed + tax receipts. Contention: No original, so no EM.

Division Bench of Kerala HC held:

Copy of a deed of transfer is not ordinarily a document of title for purposes of equitable mortgage, and that there may be cases where original document is lost and there are no chances of that document being made use of for any purpose; and in such circumstance the next best evidence of owner's title would be a certified copy.

Held: Registration copy can validly create EM. Court noted where there are multiple beneficiaries, registration copy carries equivalent evidentiary value.

This judgment is cited in almost all later cases.

CASE 2: State Bank of Travancore v. Velayudhan Pillai Bhaskaran Nair, 1995 1 MH LJ 175 & 1995 - Clarification of Assiamma

Later Division Bench clarified:

"We have not understood the observation of the Division Bench to mean that only in cases where original title deed is lost that deposit of a registration copy can validly create an equitable mortgage."

Held: In order to create valid EM it is not necessary original documents should be deposited and deposit of copy of title deeds are sufficient, it is only intention of parties that is prime factor to be considered.

CASE 3: Syndicate Bank v. Estate Officer - Followed in Lakshmi Vilas Bank v. Auljothi Fibre, 2007
Madras HC considered whether EM can be created without originals and without depositing all relevant documents. Relying on Assiamma, held copy of documents can also be deposited in creating EM.

CASE 4: DRAT Kolkata - Validity of equitable mortgage created by deposit of title deed copies instead of originals - Dreamlaw 2023

Facts: Property leased 1949 to Panchanan Saha, died leaving sons Parimal etc. Bank claimed EM by deposit of certified copies, no original deposited. Contradictory stand about deposit of originals.

DRAT held:

Equitable mortgage could not be created by depositing certified copies of Title Deed. No original title deeds were deposited. Depositing only copies does not create valid mortgage under Sec 58(f). Thus, no legally enforceable mortgage was created. DRT has rightly set aside Bank's action under SARFAESI Act.

Ratio: This is the strict view - If original is available and you deposit only certified copy, EM fails and SARFAESI action under Sec 13(4) fails.

CASE 5: Law Web Analysis of Supreme Court Trend on Lost Deeds

Supreme Court / High Courts have always accepted:

When title is traced to an award or probate, originals of which are in Court, Courts have always accepted right of party to deposit copies thereof to evidence valid EM. The general trend is if originals are lost, valid EM could be created by depositing a copy. If in some cases it was held deposit of such copies did not create valid EM, it was because loss of original was not proved.

4. Bank's SOP for Accepting Certified Copy - Current Practice

You can accept certified copy only if you convert risk to registered mortgage or take safeguards:

If Original Lost:

1. FIR / Police Complaint for loss + Notarized Affidavit by owner stating loss, no prior mortgage, no deposit elsewhere
2. Paper publication in two newspapers (English + Vernacular) about loss
3. Certified copy from Sub-Registrar - must be recent [within 30 days] with chain of title - EC for 30 years
4. No other better document available - Prove search
5. Legal Opinion from empaneled advocate - must certify "certified copy can be accepted as next best evidence u/s 65 Indian Evidence Act, 1872"
6. Create Registered Mortgage instead of Equitable Mortgage if possible. As State Bank of Mysore internal circular B4 stated:

"In absence of original document, it will not be in order to continue advance on strength of certified copy as it is an equitable mortgage and not registered mortgage and in case there is difficulty to produce original, there appears to be no alternative except to execute registered mortgage in Bank's favour"

1. Indemnity Bond + Additional collateral if possible
2. CERSAI registration must mention "Certified Copy - Original Lost"
3. In CBS: Flag as "Mortgage by Certified Copy - Original Lost"

If Original in Court / DRT / Probate Court:

• Court certified copy + Court certificate that original retained
• Link document from Court

Never Accept:

• Photocopy, Xerox, Notarized copy - only Sub-Registrar certified copy
• Jamabandi / Mutation / Tax Receipt alone - these only evidence possession, not title
• Certified copy when original is available with borrower - This will fail under SARFAESI - as DRAT Kolkata held, no EM created.

Legal Risk:
If you accept certified copy without proving loss and creating registered mortgage, under Sec 17 SARFAESI, DRT will set aside your Sec 13(4) possession notice. Supreme Court in Central Bank of India v. Cosmos Co-op Bank (2024) Justice Pardiwala judgment held mortgage created by deposit of title deeds prevails over equitable mortgage created by deposit of agreement to sell. Priority depends on quality of title document deposited. Original always prevails.

Practical Rule for Branch:

Original available = Always EM by original
Original lost = Certified Copy + FIR + Affidavit + Paper Pub + EC + Registered Mortgage Deed at borrower's cost. Do not create EM by certified copy alone.

Want the draft of Affidavit for loss of original title deed + Indemnity Bond format that DRT accepts?