Undertaking must be registered, attested and signed by parties

by | 13 Oct, 2015 | Civil Law Cases

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My father gave a loan to his friend and took an undertaking from him that he shall not sell the properties mentioned in the undertaking in the currency of the loan. But that undertaking is unregistered but signed by the borrower. Is it legally valid?

According to section 100 of Transfer of Property Act (TPA), Where immovable property of one person is by an act of parties or operation of law made security for the payment of money to another, and the transaction does not amount to a mortgage, the latter person is said to have a charge on the property.

So charge has been created on the properties mentioned in the undertaking. But for creating valid charge it is required by section 100 and 59 of TPA that such document must be signed by both parties, registered under section 17 of Registration Act and attested by at least two witnesses.

In Bank of India vs Abhay D. Narottam (2006) 3 SCC; it is held by the supreme court that without a transfer of interest mere undertaking is not sufficient to create a charge. It is necessary for the transfer of interest to registered the document according to section 59 TPA and section 17 Registration Act.

You must register the document according to the above-mentioned sections of the TPA and Registration Act. Otherwise, it shall not be read the evidence and it is not a valid document for creating a charge.

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