Undertaking must be registered, attested and signed by parties
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 currency of 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 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 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 transfer of interest to registered the document according to section 59 TPA and section 17 Registration Act.
You must registered the document according to above mentioned sections of TPA and Registration Act. Otherwise it shall not be read an evidence and it is not a valid document for creating charge.
Shivendra Pratap Singh
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