State Govt. has powers u/s 58(f) of TP Act to declare every part of State being brought within its ambit, for purpose of creation of equitable mortgage by deposit of Title Deeds: Kerala HC

Read Judgment: Pradeep Kumar P vs. State of Kerala 

Pankaj Bajpai

Ernakulam, December 16, 2021: The Kerala High Court has opined that the State Government has powers u/s 58(f) of the Transfer of Property Act, 1882, to declare every part of the State being brought within its ambit, for the purpose of creation of equitable mortgage by deposit of Title Deeds. 

The Single Judge, Devan Ramchandran, therefore observed that decision of the Government to bring in a particular territory or area within the umbra of Section 58(f) of the “T.P. Act” is essentially a policy and financial decision. 

If the Government was of the considered opinion that the entire State of Kerala required to be notified, so as to enable Banks and other Financial Institutions to enjoy the fiscal flexibility offered by Section 58(f) of the “T.P. Act”, this Court cannot find fault with it, added the Single Judge. 

The observation came pursuant to a plea raised by Pradeep Kumar – Loan borrower (Petitioner) from South Indian Bank Ltd., for which he had delivered certain title documents as security. It was contended by the petitioner that since the documents were delivered at Kanjirapilly, it cannot be construed to have created an equitable mortgage over the property in question because, as per the original provisions of Section 58(f) of the Transfer of Property Act, such a deposit was permitted only in certain specified towns. 

After considering the submissions, the High Court noted that the Government in the year 2010, thought it fit to bring its entire territory within the purlieus of Section 58(f) of the “TP Act”, so as to enable creation of equitable mortgages through the deposit of title deeds at any place, without having to follow the constraints of registration. 

Under Section 58(f) of the “T.P. Act”, there is no fetter or bridle on the right of the State Government concerned to issue a notification bringing in its territories into the fold of Section 58(f), added the Court. 

Justice Ramchandran went on to observe that it is certainly within competence of the Government to even take out portions of a town or a city or a panchayat and notify it specifically u/s 58(f) of the “T.P. Act”, so as to cover only that area, and this would obtain favour in law as long as it is hypostasised on an assessment of the financial requirements and ease of business requisites. 

The Single Judge therefore concluded that challenge of the petitioner against the notification of the Government SRO NO. 1002/2010, bringing the entire State of Kerala within the beneficial embrace of Section 58(f) of the “T.P. Act”, cannot be sustained.