Neelam had a property situated in Prayagraj. She was in urgent need of money for business purposes and therefore approached the creditor, showed her documents and borrowed money. She delivered the title deed in the city

The mortgage referred to in the question is Mortgage by deposit of title deeds. This type of mortgage is called equitable mortgage in English law. In this transaction, a person delivers to the creditor or his agent documents of title of his immoveable property with an intention to create a security, and obtains a loan. The requisites of such a mortgage are (i) a debt, (ii) deposit of title deeds, and (iii) an intention that the deeds shall be security for the debt. In order that a valid mortgage on an immoveable property should be effected, it must be in writing and attested by two witnesses and the document must be registered. But in case of a mortgage by deposit of title deeds, it need not be registered and an oral agreement between the person and the creditor followed by the delivery of the documents of title to the property is enough. The creditor will have the possession of the documents and he will advance the money at the stipulated rate of interest. In case the mortgagor does not repay the loan, the creditor on the basis of having the title deeds in his possession can sue the debtor to recover the money. This type of mortgage has been recognized due to expediency. Many persons, especially the business people, may need money urgently and they cannot wait till a formal document is written, signed, attested and then registered. So, they will simply approach the creditor and hand over the title deeds of their property and borrow money. This avoids delay and other formalities for effecting a valid mortgage. It should be noted that this type of mortgage can be created only in certain towns and not everywhere in India. By virtue of this case, it is clear that the facility to create a valid mortgage is available in the following towns in India: Calcutta, Madras, Bombay, Adoni, Ajmer, Allahabad, Alwar, Bangalore, Bellary, Cochin, Coimbatore, Delhi, Jaipur, Jodhpur, Kanpur, Rajahmundry, Udaipur, Vellore, Ellora, Pali, Bhilwara, Bikaner, Kakinada, Narayanganj, Mysore, and Madurai. Though this type of mortgage is limited to specific cities it is at par with any other legal mortgage ( K.J. Nathan v. S.V. Maruthi Rao, A.I.R. 1965 S.C. 443 ). Title deeds should be delivered in these areas, the property of the person may be situated elsewhere. If the deposit of title deeds has taken place in any other town, it will not be a valid mortgage. Similarly, if the property is situated in any one of the towns mentioned above, but the deposit of title deeds is made in other towns or areas then again it will not be a valid mortgage. Neelam had a property situated in Prayagraj. She was in urgent need of money for business purposes and therefore approached the creditor, showed her documents and borrowed money. But she delivered the title deed in the city of Lucknow. This is not a valid mortgage by deposit of title deeds because title deeds should be delivered in the above-mentioned areas, the property of the person may be situated elsewhere. If the deposit of title deeds has taken place in any other town, it will not be a valid mortgage. Alternate Answer The mortgage referred to in the question is a Mortgage by deposit of title deeds, governed by Section 58(f) of the Transfer of Property Act, 1882. This type of mortgage is also referred to as an equitable mortgage in English law. In this transaction, a person delivers to the creditor or his agent documents of title of his immoveable property with an intention to create a security, and obtains a loan. The requisites of such a mortgage are (i) a debt, (ii) deposit of title deeds, and (iii) an intention that the deeds shall be security for the debt. However, an exception is carved out under Section 58(f) of the Transfer of Property Act, allowing a mortgage without registration where the title deeds are deposited in notified towns. But in case of a mortgage by deposit of title deeds, it need not be registered and an oral agreement between the person and the creditor followed by the delivery of the documents of title to the property is enough. The creditor will have the possession of the documents and he will advance the money at the stipulated rate of interest. In case the mortgagor does not repay the loan, the creditor on the basis of having the title deeds in his possession can sue the debtor to recover the money. This type of mortgage has been recognized due to expediency. Many persons, especially the business people, may need money urgently and they cannot wait till a formal document is written, signed, attested and then registered. So, they will simply approach the creditor and hand over the title deeds of their property and borrow money. This avoids delay and other formalities for effecting a valid mortgage. It should be noted that this type of mortgage can only be created by depositing title deeds in certain notified towns as specified by the State Government through a Gazette Notification under Section 58(f) of the Transfer of Property Act. The facility to create such a mortgage is available only in towns that have been officially notified by the State Government in the Gazette. Merely being a large or important city is not sufficient unless it is a notified town. Title deeds should be delivered in these areas, the property of the person may be situated elsewhere. If the deposit of title deeds has taken place in any other town, it will not be a valid mortgage. Similarly, if the property is situated in any one of the towns mentioned above, but the deposit of title deeds is made in other towns or areas then again it will not be a valid mortgage. Though this type of mortgage is limited to specific cities it is at par with any other legal mortgage ( K.J. Nathan v. S.V. Maruthi Rao, A.I.R. 1965 S.C. 443 ). Neelam had a property situated in Prayagraj, which is a notified town under Section 58(f). However, she delivered the title deed in the city of Lucknow. If it is shown that Lucknow is a notified town under Section 58(f), then the mortgage will be valid even though the property is situated in Prayagraj. Thus, the validity of this mortgage depends on whether Lucknow is a notified town under the relevant notification.