Hi
1) Since you have taken a loan from the bank by way of deposit of title deeds, the mortgage by way of deposit of title deeds exists on the house.
2) The following are the main Characteristics of a mortgage by deposit of title-deeds –
(i) It is created in the towns of Calcutta, Madras and Bombay and other towns notified in the Official Gazette . It can be created in such towns , by deposit of title-deeds, even though the property is situated outside those towns.
(ii) It is effected by deposit of material title-deeds. It is not necessary that all the deeds should be deposited. It is sufficient if material documents are deposited.
(iii) Delivery of possession of property does not take place.
(iv) This mortgage is made to secure a debt or advances made, or to cover future advances.
(v) Registration is not necessary, even if there is a writing recording the deposit under section 59.
(vi) This mortgage prevails against a subsequent transferee who takes under a registered instrument.
(vii) This mortgage prevails against all who are not bona fide purchasers for value without notice.
3) So in essence during the subsistence of mortgage, you should not transfer the title of the property without No objection certificate issued by the bank and
4) In absence of transfer of property without intimation to bank and banks are at liberty to frame criminal charges against you and your father as the transfer by you in favour of your father is a fraudulent transfer u/s 53.of Transfer of property act which reads as follows
Fraudulent transfer. - (1) Every transfer of immovable property made with intent to defeat or delay the creditors of the transferor shall be voidable at the option of any creditor so defeated or delayed.
5) Any transfer of immovable property made with intent to defeat or delay the creditors of the transferors and transfer made without consideration with intent to defraud a subsequent transferee are void and at the option of the subsequent transferee is voidable
6) So the settlement deed is actually VOID in the eyes of the bank as the loan agreement still exists and as per bank records, you are the owner of the property.
7) Now the options available to you are
a) either you foreclose the loan and make your father the owner of the property
OR
b) Cancel the settlement deed(you and your father can jointly cancel the settlement deed)
Also ensure that your loan account does not become NPA till such time you rectify the issue.