Prabhu Lal v DLF Universal Ltd

Facts

• Borrower deposited original title deeds with lender as security for a loan
• No mortgage deed was executed; no registration done
• Validity of the mortgage was challenged

Issue

1. Whether creation of an equitable mortgage by deposit of title deeds requires any writing.

Held

• S.58(f) requires only: (a) deposit of title deeds, (b) in a notified town, (c) with intent to create security. No writing, registration, or stamp duty required. Oral communication of intent suffices.

Ratio Decidendi

The equitable mortgage is the ONLY form of mortgage exempt from registration. The deposit itself IS the security: the lender holds the documents and the borrower cannot deal with the property without them. This practical protection substitutes for formal documentation.