Equitable mortgage (also called mortgage by deposit of title deeds) is a form of mortgage created by depositing the original title deeds of immovable property with a creditor, with the intention of creating a security interest over the property. Under Indian law, this form of mortgage is defined in Section 58(f) of the Transfer of Property Act, 1882 and does not require a written instrument or registration.
Legal definition
Section 58(f) of the Transfer of Property Act, 1882 provides:
Section 58(f): Where a person in any of the following towns, namely, the towns of Calcutta, Madras and Bombay, and in any other town which the State Government concerned may, by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent, documents of title to immoveable property, with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds.
Three essential elements are required for a valid equitable mortgage: (1) there must be a debt or loan obligation, (2) the debtor must deposit documents of title to immovable property with the creditor, and (3) the deposit must be made with the intention that the documents serve as security for the debt.
The critical restriction is that equitable mortgages can only be created in the towns of Kolkata, Chennai, and Mumbai, or in other towns notified by the respective state governments. Most states have notified all municipal areas and many have notified their entire territory, making equitable mortgages widely available in urban India.
How courts have interpreted this term
Syndicate Bank v. Estate Officer & Manager, APIIC Ltd. [(2007) 8 SCC 361]
The Supreme Court held that for an equitable mortgage, intention cannot be presumed merely from the creditor's possession of title deeds. Even where a debt exists and the creditor holds title deeds, a mortgage cannot be presumed unless the intention of depositing those documents was specifically to create security for that debt. The burden of proving the requisite intention lies on the party asserting the mortgage.
State of Haryana v. Navir Singh [(2024)]
The Supreme Court clarified that the mortgagor's act of depositing title deeds is sufficient to create an equitable mortgage under Section 58(f). The execution of a memorandum of entry (MOE) or undertaking is not obligatory — these are merely pieces of evidence recording the act of deposit, not instruments creating the mortgage. Consequently, equitable mortgages do not require registration under the Registration Act, 1908.
United Bank of India v. Satyawati Tondon [(2010) 8 SCC 110]
The Court confirmed that banks holding equitable mortgages can enforce their security interest under the SARFAESI Act, 2002. An equitable mortgage creates a valid security interest that entitles the bank to take enforcement action (possession and sale) without approaching the court, subject to the borrower's right to challenge before the Debt Recovery Tribunal.
Why this matters
The equitable mortgage is the most widely used form of mortgage in India's banking sector. Banks and housing finance companies prefer it because it is the simplest, fastest, and cheapest form of mortgage to create. Unlike a simple mortgage, which requires drafting a mortgage deed, paying stamp duty, and registering the instrument, an equitable mortgage is created by the mere act of depositing original title deeds with the lender.
For borrowers, the practical implication is significant. When a homebuyer takes a loan, the bank retains the original sale deed, title chain, and other property documents for the entire tenure of the loan. The borrower cannot sell, transfer, or further mortgage the property without the bank releasing these documents. Upon full repayment, the bank returns the documents, effectively discharging the mortgage.
A common misunderstanding is that equitable mortgages can be created anywhere in India. Section 58(f) originally restricted them to Kolkata, Chennai, and Mumbai. State governments have progressively notified additional towns, and most urban areas are now covered, but practitioners should verify whether the specific location has been notified. In unnotified areas, a written and registered mortgage deed is required.
Related terms
Broader concepts:
Sibling mortgage types:
Related documents:
Frequently asked questions
Does an equitable mortgage need to be registered?
No. The Supreme Court in State of Haryana v. Navir Singh (2024) confirmed that an equitable mortgage under Section 58(f) TPA is created by the act of depositing title deeds with intent to create security. No written instrument, registration, or stamp duty is required. A memorandum of entry, if executed, is merely evidentiary and not an instrument of creation.
Can an equitable mortgage be created in any city in India?
Equitable mortgages can be created only in towns notified under Section 58(f) TPA — originally Kolkata, Chennai, and Mumbai, and subsequently other towns notified by state governments. Most states have notified all municipal areas, making equitable mortgages widely available in urban India. In unnotified areas, a registered mortgage deed is required.
Can a bank sell property held under an equitable mortgage?
Yes. Under the SARFAESI Act, 2002, a bank holding a valid equitable mortgage can enforce the security by issuing a 60-day notice to the borrower and, upon default, proceeding to take possession and sell the property without court intervention. The borrower may challenge the action before the Debt Recovery Tribunal under Section 17.
This entry is part of the Veritect Indian Legal Glossary, a comprehensive reference of Indian legal terminology grounded in statutory text and judicial interpretation.
Last updated: 2026-03-27. Veritect provides this content for informational purposes and does not constitute legal advice.