Mortgage and Pledge Format India — Free Templates & Samples

A Mortgage is the transfer of an interest in specific immovable property to secure the payment of money advanced or to be advanced. Under Section 58(a) of the Transfer of Property Act, 1882, the borrower (mortgagor) transfers an interest to the lender (mortgagee), with a condition that the interest will be reconveyed upon repayment. Common types include a simple mortgage under Section 58(b), where the mortgagor personally binds themselves to pay, and an equitable mortgage by deposit of title deeds under Section 58(f).

A Pledge, under Section 172 of the Indian Contract Act, 1872, is a bailment of goods as security for payment of a debt or performance of a promise. The key difference is that a pledge involves movable property (like jewelry, shares, or goods) and requires delivery of possession to the pledgee, whereas a mortgage involves immovable property.

Both instruments are legally valid if executed by competent parties for lawful consideration. Mortgages must be registered under Section 17 of the Registration Act, 1908, to be enforceable. Any property owner or asset holder can create these securities. Understanding what is mortgage and pledge in Indian law is crucial for lenders to recover dues and for borrowers to secure funding without immediately selling their assets.

Home and Property Loans: When a borrower purchases a house or land, the bank requires a registered equitable mortgage by deposit of title deeds under Section 58(f) of the Transfer of Property Act, 1882.

Business and Project Financing: When a company secures a term loan for machinery or expansion, it executes a mortgage deed over its factory or commercial property.

Jewelry or Gold Loans: When an individual pledges gold ornaments or jewelry with a bank or NBFC for immediate cash, a pledge deed formalizes the possession transfer.

Securing Share Holdings: When promoters pledge their company shares with financial institutions as collateral for corporate loans.