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-:LEGAL OPINION:-

To ,

Chief Manager, Date: 10/03/2012

State Bank of India,
Br. Kolhapur

Reference:- Your Letter dated 09/03/2012 seeking Legal Opinion about TI and Search Report of Adv.
M.D. Pandit about mortgage of the property of Mr. Sajan D. Rawal.

Dear Sir,

I have gone through the search report of Adv. Mrs. M.D. Pandit in respect of
property at “Flat no. 102, Hinda Paradise, 1st Floor, Building No. B, C.S. No. 36/A/27, Tarabai
Park, Kolhapur “ which is in favor of Mr. Sajan D. Rawal, the proposed borrower of the
bank. After going through the captioned TI and Search report of Adv. Mrs. M.D. Pandit it
reveals that the said Mrs. Rawal has entered into an agreement to sale with the builder,
owner and developer of said building where the proposed flat is situated. It also reveals
that in the captioned TI and Search Report, Adv. Mrs. M.D. Pandit has suggested creation
mortgage of the bank over the present property by way of a registered mortgage. Further
she has also suggested the bank to take custody of title deeds of Mr. Rawal in its
possession.

As per S. 58 (a) of Transfer of Property Act -- “Where, without delivering

possession of the mortgaged property, the mortgagor binds himself personally to pay the
mortgage- money, and agrees, expressly or impliedly, that, in the event of his failing to pay
according to his contract, the mortgagee shall have a right to cause the mortgaged
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property to be sold and the proceeds of sale to be applied, so far as may be necessary, in
payment of the mortgage- money, the transaction is called a simple mortgage “. As per
mandate laid down in T.P. Act Simple Mortgage needs to be necessarily registered.

As per S. 58 (f) of Transfer of Property Act --- “ 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.” (Or Equitable Mortgage).
After going through the above definitions it can be ascertained that, the “Simple
Registered Mortgage” can be created of any type of property by its owner(s) (except
prohibited by any law or rule as the case may be) while an equitable mortgage can be
created only where the title deed is present and can be obtained from the
mortgager/borrower in order to create the mortgage over the concerned property.
If the Agreement to Sale of any flat/apartment/shop is coupled with the NOC of
the society/builder/promoter then it will constitute the valid title deed. Recently in year
2008, the Government of Maharashtra has amended the “Maharashtra Ownership of Flats
Act 1971” and has introduced the new creature of law named as “Deemed Conveyance”.
In the said provision the intended purchaser can approach the competent authority with
the registered agreement executed by the builder in favor of him for the conveyance of
property in case the builder does not issue him the NOC or does not co-operate him for the
conveyance of property in his favor. In that case the competent authority can issue the
intended purchaser the Certificate of enforcing the unilateral execution of conveyance
deed conveying the right, title and interest of the promoter in the land and the building
considering the said agreement as deemed conveyance. After considering the said
provision the sole “Agreement to Sale with the builder and promoter” has gained the
status of valid title deed irrespective of presence the NOC of the builder also.
In case of present property the borrower/mortgager Mr. Rawal has entered into a
registered agreement to sale with the builder, developer and owner. Hence the title deed is
available to create the mortgage by way of deposit of title deed (equitable mortgage) u/s.
58(f) of T.P. Act over the present property. Further, the EM is not required to be registered
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unlike the other forms of mortgages as enumerated in S.58 of the T.P. Act hence it will save
the expenses of registration fees (upto 1% of loan amount or Rs. 30,000/- Whichever is
higher) and page scanning fees (charged at Rs. 20 per page) charged by the government.
Further, the City of Kolhapur is the Scheduled City where the equitable mortgage can be
created as per the official gazette of the State of Maharashtra.
Hence, in my view the creation of Simple Registered Mortgage of present
property is not necessary and required (as suggested in TI and Search Report of Adv. Mrs.
M.D. Pandit) as the present borrower/mortgager can legally and validly create the
equitable mortgage of present property in favor of bank u/s. 58(f) of T.P. Act. But I shall
recommend the bank to take the following documents in its custody in order to create the
EM of present property in its favor if it opts to go for an equitable mortgage those are:-

1) Original Copy of Agreement to Sale along with original registration receipt.

2) Index II extract of the relevant Agreement to Sale.
3) Latest copy of property card or 7/12 extract
4) Photostat copy of duly updated commencement certificate
5) NOC from the builder and developer for creation of mortgage.
6) NOC from the financing banker of the builder and developer (if any.)

Hope this opinion will clarify your queries and doubts.

Note:- ( I have not verified or cross-checked the Title Investigation and Search Carried out by Adv. Mrs.
M.D. Pandit and have delivered the present opinion under the bona-fide belief that the title of
the present borrower as well as developer and seller is clear and marketable as per her TI and
Search Report. Hence my liability will be limited up to this legal opinion only and not otherwise)

Kolhapur Thanking you.

Date: 10/03/2012