solution

Give the rationale behind each of the undernoted procedures being followed, and the precautions being taken, by the banks, in the event of creation of an equitable mortgage:

(i) The banks record (in a Register) the actual happening of the event, while the creation of the equitable mortgage by way of deposit of title deed, by the borrowal companies takes place, recording the full details of the event, in terms of date, time, place and also the persons present. Such details are duly signed by at least two officials of the bank (other than the chief manager of the branch), as witnesses.

(ii) The bank officers see to it that none of the representatives of the borrowal companies put their signatures in the Register.

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(iii) The bank insists on getting a letter, to the effect that the title deed has been duly handed over to the bank for creation of an equitable mortgage by the company.

 (iv) Further, the bank also gives a pro forma letter to such effect, to be posted by registered post, by the borrowing company (creating the equitable mortgage) at a later date.

(v) Such pro forma letter has since been printed on the pattern of an inland letter, to be duly stamped and posted, instead of on a plain piece of paper, to be posted under a separate cover.

(vi) The banks unvariably prefer to accept the title deeds, in original, and seldom the duplicate copies thereof, and that too, as a special case.

 
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