Is it possible to cancel the settlement deed which I gifted
In 2010 , at vellore tamilnadu , we bought a house under house loan , loan has been bought under my name , house also registered under my name after 3 years due to some problem with my father i, he asked me to register the house in his name , so i have registered the house in his name , through settlement deed , now the problem is .housing loan is in my name , main papers are in bank , settlement document is in my father's name . so i want to know who is the owner of that property , also can i cancel the settlement document , can i have that power or my father can cancel the settlement document
Asked in Property Law from Vellore, Tamil Nadu
1) once gift deed is executed your father would be absolute owner of property .you cannot cancel the gift deed unilaterally
2) you have to move court to set aside gift deed on grounds of undue influence or coercion
3) chances of court setting aside gift deed are bleak
4) gift deed can be cancelled with mutual consent of parties
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
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.
1. How could you execute a settlement deed in favour of anyone, without the consent of the bank, during the pendency of the mortgage? A mortgaged property cannot be settled by the mortgagor except with the prior consent of the mortgagee.
2. The settlement deed is void and can be declared so by the civil court if a suit for declaration is filed by the bank.
Once a settlement deed executed and registered, it cannot be cancelled unilaterally.
If both the donor and the donee mutually agree to cancel the same, they can make an agreement to this effect and may apply jointly to cancel the registered settlement before the registrar. The registrar at its discretion may register the cancellation deed or can even refuse with an advise to approach court of law. Then the donor may file a suit to declare the settlement deed as null and void for the reasons stated therein by impleading the donee as a respondent. Then the donee if agrees to this and submits to the prayer then a direction may be given to the registrar to register the cancellation deed by declaring the settlement deed as null and void.
The bank will not interfere in this matter until there is no default in repayment of loan.
The settlement deed you registered is not legally a title deed presently as there is mortgage pending .However it is a future liability based on the terms of the deed of a settlement , so cancel it
You can cancel the settlement deed , the power of attorney in your name will not be advisable to cancel it as you will be doing it for the both side and the cancellation can be challenged.
it is better that your dad give power of attorney to anyone you comfortable , in case he cant sign the cancellation in person