Loans against Policies, Paper Securities.pptx

Loans against Insurance Policies,
Loans against National Saving Certificates.
Loans against Fixed Deposits,
Loans against Bonds, Debentures,
Loans against Shares

1. Prof.Shantilal Hajeri

2. Types of Non Priority Loans (Secured) Loans against fixed deposits. Loans against fixed deposits of other Banks. Loans against insurance policies. Loans against mutual funds. Loans against shares. Loans against Post Office investments such as NSCs. Loans against Bonds and Debentures Loans against Gold and Gold  ornaments Loan against property (LAP) Reverse Mortgage loans Prof.Shantilal Hajeri

3. General Eligibility norms for consumer loans Minimum income from Salary or business Proof of Income, Income Tax return and Salary certificate Maximum deductions allowed in case of salary including EMI of the proposed loan Banking relation with a minimum period Minimum period of service in a job Minimum period of stay in present address Prof.Shantilal Hajeri

4. General Eligibility norms for consumer loans Minimum CIBIL Score Minimum amount of down payment/margin money Satisfactory past record Statement of Bank account for the past 6 months One or two acceptable guarantors Primary security (Hypothecation of Asset) Prof.Shantilal Hajeri

5. Credit Rating A credit rating is an evaluation of an issuer of specific types of debt made by credit rating agencies on the basis of financial history and current assets and liabilities. Credit rating is usually of a financial instrument such as a bond, rather than the whole corporation Credit ratings are An opinion on probability of default on the rated obligation Forward looking Specific to the obligation being rated Prof.Shantilal Hajeri

6. What is a CIBIL Score and Report? CIBIL Score is a three-digit numeric summary of your credit history. The score is derived using the credit history found in the CIBIL Report (also known as CIR i.e Credit Information Report). A CIR is an individual’s credit payment history across loan types and credit institutions over a period of time. A CIR does not contain details of your savings, investments or fixed deposits. Website: https://www.cibil.com Prof.Shantilal Hajeri

7. CIBIL Score Prof.Shantilal Hajeri CIBIL Score ranges between 300-900. A score above 700 is generally considered good .

8. Loan Amount Eligibility 1 Gross Salary 50000 2 67% of Gross 33500 3 Existing Deductions 23000 4 Balance for proposed EMI 10500 Loan amount will be such that EMI is < 10500 Prof.Shantilal Hajeri If the Rate of interest is, 10% and If the Period of Loan is 3 years, EMI for a loan of Rs.1,000 will be Rs.33.51. Loan amunt for an EMI of Rs.10,500 will be Rs.3,13,339. {(10500X1000)/33.51}

9. Prof.Shantilal Hajeri

10. Prof.Shantilal Hajeri

11. Prof.Shantilal Hajeri

12. Introduction a n individual borrows money from others to satisfy his necessities. Even during the ancient times, borrow ing the money from moneylenders was in vogue and the moneylenders used to keep the property of borrower as security for the repayment of the loan. This tendency later known as hypothecation or mortgage of property, movable or immovable. It was a universal practice that value of the property kept as mortgage was higher than the loan amount even calculated with interest. Prof.Shantilal Hajeri

13. Introduction Security for a loan is considered as a cushion in case of default. Bank may sell it to recover the dues if the well-calculated source of repayment unexpectedly fails. An advance is granted by a good banker on its own merits and not just because the security is good. Security serves as a safety valve for an unexpected emergency. It also renders very difficult for the borrower to raise a secured advance from another source against the very security. Prof.Shantilal Hajeri

14. Principals of Lending Who is the Applicant? What is the purpose of the loan? What is the amount of the loan? What is the Security and its value? Is the business viable? Prof.Shantilal Hajeri

15. Prof.Shantilal Hajeri

16. Features of a Good Security Primary & collateral security should be ‘MASTDAY’ M – Marketability A – Easy to ascertain its title, value, quantity and quality. S – Stability of value. T – Transferability of title. D – Durability – not perishable. A – Absence of contingent liability. I.e. the bank may not have to spend more money on the security to make it marketable or even to maintain it. Y – Yield. The security should provide some on-going income to the borrower/ bank to cover interest & or partial repayment. Prof.Shantilal Hajeri

17. Various Kinds of Securities For Term Loans Land/Real Estate- Plant and Machinery Furniture and Fixtures Vehicles Gold Stocks and Shares- and Mutual Fund Units Debentures Life Insurance Policies- Fixed Deposit Cattle Prof.Shantilal Hajeri

18. Various Kinds of Securities For Short Term Loans or Cash Credit Supply Bills Goods Book Debts (Trade Receivables) Standing Crops Prof.Shantilal Hajeri

19. Book debt A book debt is a sum of money due to a business in the ordinary course of its business. It has been described as a debt that would normally be entered in the books of the business regardless of whether or not it is in fact entered. Book debts include sums owed to a business for goods or services supplied or work carried out. Sums due under loans may also be treated as book debts. Prof.Shantilal Hajeri

20. Life insurance policy A life insurance policy is something that provides a dedicated sum of money on the demise of the policyholder or after a certain period of time. Life insurance is a contract wherein an individual is offered financial coverage by an insurance company in exchange for a payment over a period. The amount of loan is based on the surrender value of the policy as on the date of finance. After the Assignment of the policy, the Insurance company makes the payment to the Bank and not the policy holder. Prof.Shantilal Hajeri

21. Shares or Debentures as a Security These may be classified into preference shares (which enjoy preference both with regards the payment of dividend and repayment of capital) and equity shares, i.e., shares which are not preference shares. Units of the Mutual Funds, Bonds, Debentures can also be offered as securities. Debenture is a document issued by a company acknowledging its indebtedness to the bearer or a registered holder. A fixed rate of interest is payable at stated periods on such debentures. Prof.Shantilal Hajeri

22. Fixed Deposit When money deposited by a customer is not repayable on demand and is payable on the expiry of a specified period from the date of deposit such a deposit is called a ‘Fixed Deposit’. The banker evidences a deposit by issuing a receipt known as fixed deposit receipt. Interest, is paid at regular intervals at a specified rate on such deposits. Banks usually permit depositors to borrow against the deposit. Prof.Shantilal Hajeri

23. Supply bills Supply bills arise in relation to transactions with the Government and public sector undertakings. A party might have taken a contract for execution, and he is entitled to progressive payments based on work done, for which he has to submit bills in accordance with the terms and conditions of the contract. Similarly, parties who have accepted tenders for supply of goods over a period are entitled to payments on the supply of goods, for which they submit bills in accordance with the terms of the contract. These bills are known as supply bills. Prof.Shantilal Hajeri

24. Modes of Creating Charge 1. Fixed Deposit: Lien 2. Goods/Stock/Gold: Pledge 3. Goods/Stock/Movable assets: Hypothecation 4. Immovable property: Mortgage 5. Life Insurance Policy: Assignment Prof.Shantilal Hajeri

25. Pledge of Security Pledge means bailment of goods for the purpose of providing security for payment of debt or performance of promise. Section 172 of Indian Contract Act, 1872 defines pledge. Prof.Shantilal Hajeri

26. Lien Section 171 of the Indian Contract Act,1872 gives to the banker an absolute right of general lien on all goods and securities received by the banker. The banker has general lien on all deposits. If the deposit receipt is given as a security for raising a loan or discharging an obligation then the lien on such deposit receipt, is a particular lien, and it would exist till the debt is cleared or the obligation is fulfilled. Prof.Shantilal Hajeri

27. Hypothecation The term “Hypothecation’ means a charge created on any movable asset/property, for a loan borrowed by the owner of goods/movable assets (existing or future) without transferring, either the property or the possession to the lender. Prof.Shantilal Hajeri

28. Assignment Assignment is a type of charge on certain securities offered to a creditor. It is the transfer of right, for a property or debt. Two persons are involved, the person who transfer his right is called the assignor and the beneficiary is called assignee. For example when a bank gives loan to a borrower against his book debts (future receivables), two parties involved are (i) the borrower (debtor) and the banker (creditor). The borrower/debtor, who is called the assignor, transfers his rights of receiving the funds from his customers. The banker (lender/creditor) to whom the rights are transferred is called as the assignee. Prof.Shantilal Hajeri

29. Mortgage Structure of the Chapter Definition and kinds- S. 58, 96 and 98 Charge- 100 and 101. Rights and liabilities of the Mortgagor- S. 59-66 and s. 95 respectively. Rights and liabilities of the Mortgagee- 67-73, 94 and s. 67-A, 76-77. Redemption - S 60, 91 Foreclosure or Sale- S 67 Marshalling and Contribution - S 81 & 82 . Subrogation- S 92. Prof.Shantilal Hajeri

30. Section 58 (a) Mortgage, Mortgagor, Mortgagee, Mortgage money, Mortgage Deed: A Mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. Prof.Shantilal Hajeri

31. Mortgagor The transferor is called a mortgagor, the transferee a mortgagee; the principal money and interest of which payment is secured for the time being are called the mortgage money, and the instrument by which the transfer is effected is called a mortgage deed. Prof.Shantilal Hajeri

32. Mortgage Deed Section 2(17 Indian Stamp Act Mortgage deed includes every instrument whereby, for the purpose of securing money advanced or to be advanced, by way of loan or an existing or future debt, or the performance of an engagement, one person transfers or creates, to or in favour of another, a right over or in respect of specified property ’ . Prof.Shantilal Hajeri

33. Judicial Approach towards meaning of Mortgage The Karnatka High Court in B. Jayashankarappa and others v. D.S.Gulwadi AIR 2000 Kar. 359 held as follows: “ A reading of section 58 shows that a mortgage, no doubt is a transfer, but not the transfer of absolute ownership rights and in this respect it differs from sale. A mortgage is said to be transfer of a limited interest in a specific immovable property. The purpose of mortgage is said to secure the payment of money, advanced as loan or an existing or future debt. In a sale, all the rights of ownership that the transferor possesses in the property, pass on by transfer to the transferee. In a mortgage, some rights are transferred to the mortgagee, while rest remain with the mortgagor ” . Prof.Shantilal Hajeri

34. Essentials Mortgagor, Mortgagee, Transfer of Interest- creating new limited interest in favour of Mortgagee Specific immovable property, Purpose of Mortgage- As a Security of repayment of debt i.e. securing a debt or performance of pecuniary obligation Consideration - Money advanced or to be advanced as a loan – Creation of debt may be existing (past) or future debt Prof.Shantilal Hajeri

35. Mortgagor Mortgagor must be a person competent to contract and capable to transfer the property. A minor cannot affect a mortgage, but a guardian or minor can affect a valid mortgage with the sanction of the court. If several persons execute a mortgage and some of them are minor, the mortgage is only partly invalid. It remains operative and valid for those who were competent to execute it. Prof.Shantilal Hajeri

36. Minor’s property Where the guardian of a minor executes mortgage of the property without the sanction of the court, the mortgage is not void but voidable at the option of the minor which he can exercise on attaining majority. It is important to point out here that in a mortgage executed by a minor, creditor cannot seek the benefit of section 64 and 65 of Indian Contract Act, to get the things restored. Prof.Shantilal Hajeri

37. Property owned by Joint Hindu Family If the Karta of Joint Hindu Family executes a mortgage of the joint family property without the permission of the other coparceners, the mortgage would be voidable at the option of other coparceners. In case, such a mortgage is for legal necessity, it is not necessary for the mortgagee to see the application of his money and all that he needs to show to the court is that he made reasonable inquiries and acted honestly. A partner of a commercial firm, a pardanashin woman, one of the several co-owners can effect a valid mortgage. Prof.Shantilal Hajeri

38. Mortgagee Any person who is capable to hold property can be a mortgagee irrespective of his competency to contract. It is competency to hold the property land not competency to contract which is material here, and therefore even a minor, is competent to be a mortgagee. Therefore a mortgage deed executed in favour of a minor who has advanced the whole of the mortgage money, is enforceable by him or by other person on his behalf. Prof.Shantilal Hajeri

39. Transfer of an Interest Mortgage carries a transfer of an interest with it, for a specific purpose. However this transfer of interest is different from sale because it is not a transfer of full ownership of immovable property. The class of interest transfer under the transaction of mortgage is not identical with the transfer of interests under sale. In a simple mortgage, the subject of transfer is a power of sale which would be effective and exercised in case of non payment. Prof.Shantilal Hajeri

40. Specific Immovable Property The security must be in the shape of a specific immovable property. Means property should be sufficiently identified and the description should not be general or ambiguous in character. For instance, a borrows money from B and undertakes to repay it within a period of 2 years. The contract also provides that if A fails to repay the loan within the period of 2 years B can sell any of his properties. While A has three properties, so in this case property is not specified. It is not a transaction of mortgage. The description of the property should be specific otherwise in case the property is not possible to be identified, it does not amount to mortgage. Prof.Shantilal Hajeri

41. Purpose of Mortgage Securing a debt. Performance of an engagement which gives rise to pecuniary obligation. Nidha Sha v. Murlidhar (1903) 25 All 115 - The purpose of mortgage is to ‘ secure ’ the debt. If a transfer of property is made to ‘ discharge ’ the debt it is not mortgage. Prof.Shantilal Hajeri

42. Consideration A mortgage must be supported by consideration, which may either be money advanced or to be advanced as a loan i.e. Creation of debt may be existing (past) or future debt. Consideration may even be Performance of an engagement which gives rise to pecuniary obligation. Prof.Shantilal Hajeri

43. Covenant not to sell the property A covenant by the owner not to sell his property till the loan is repaid does not make- cannot make a transaction of mortgage. Prof.Shantilal Hajeri

44. Kinds of Mortgage Simple Mortgage (Section 58 (b)) Mortgage by Conditional Sale (Section 58 (c)) Usufructuary Mortgage (Section 58 (d)) English Mortgage (Section 58 (e)) Mortgage by deposit of title deeds (Section 58 (f ) and Section 96) Anomalous Mortgage (Section 58 (g ) and Section 98) Prof.Shantilal Hajeri

45. Simple mortgage Where, without delivering possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage money, and agrees, expressly or impliedly, that, in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may be necessary, in payment of mortgage money, the transaction is called a simple mortgage and the mortgagee a simple mortgage Prof.Shantilal Hajeri

46. Mortgage by conditional sale Where the mortgagor ostensibly sells the mortgage property- On condition that on default of payment of the mortgage money on a certain date the sale shall become absolute, or On condition that on such payment being made the sale shall become void, and that on such payment being made the ‘ ostensible ’ buyer shall transfer the property to the seller, the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale. Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale. Prof.Shantilal Hajeri

47. Usufructuary Mortgage Where the mortgagor delivers possession or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee, and authorises him to retain such possession until payment of the mortgage money, and to receive the rents and profits accruing from the property or any part of such rents and profits and to appropriate the same in lieu of interest of partly in payment of the mortgage money, the transaction is called an usufructuary mortgage. Prof.Shantilal Hajeri

48. English Mortgage Where the mortgagor binds himself to repay the mortgage money on certain date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage money as agreed, the transaction is called an English mortgage. Thus, the characteristics of Sale are more pronounced in this case but it does not suggest that there is absolute transfer in the nature of sale Prof.Shantilal Hajeri

49. Difference between Mortgage by Conditional Sale and English Mortgage In case of Mortgage by Conditional Sale, the mortgagor does not bind himself personally to pay the debt, while in case of English Mortgage there is ordinarily an undertaking by the mortgagor to pay the debt personally. In case of Mortgage by Conditional Sale, the mortgagee only gets qualified ownership which ripens into absolute ownership on failure to pay debt. Thus, the remedy is foreclosure i.e. obtaining a decree from Court to debar mortgagor from his right of redemption. In case of English Mortgage, absolute interest is transferred, which divests/cancels on repayment and in case of failure to pay, the remedy is sale of property and not foreclosure. Prof.Shantilal Hajeri

50. Mortgage by deposit of title deeds Where a person in any of the following towns, namely, the towns of Calcutta, Madras, and Bombay and in any other town which the State Government concerned may, by notification in the Official Gazette, specify in this behalf, delivers to a creditor or his agent documents of title to immovable property, with the intent to create a security thereon, the transaction is called a mortgage by deposit of title deeds. It is also called as Equitable Mortgage Prof.Shantilal Hajeri

51. Anomalous Mortgage A mortgage which is not a simple mortgage, a mortgage by conditional sale, an usufructuary mortgage, an English mortgage or a mortgage by deposit of title deeds within the meaning of this section is called an anomalous mortgage. Prof.Shantilal Hajeri

52. Registration of Charges Registration of Charges are covered under Sec125 and other relevant sections of the Indian Companies Act,1956. It covers the following charges:  A charge for the purpose of securing debentures  A charge on uncalled capital of the company  A charge on any immovable property, wherever situated, or any interest therein  A charge on any book debts of a company  A charge not being a pledge, on any movable property of the company A floating charge on the undertaking or any property of the company including stock-in-trade  A charge on calls made but not paid  A charge on a ship or any share in ship A charge on goodwill, on a patent or a licence under a patent or a trade mark or on a copyright or a license under a copyright Prof.Shantilal Hajeri

53. Documentation Documents establish relationship between the banker and the borrower and avoids ambiguities. Documents executed by a company should be sealed as per the provisions of Articles of Association of the company Primary Evidence: As per section 62 of the Indian Evidence Act, primary evidence means the document itself produced for the inspection of the court. T he main purpose of document is to create a documentary evidence of a transaction. Prof.Shantilal Hajeri

54. Meaning of Document As per section 3 of the Indian Evidence Act a document is any matter expressed or described by letter, figures or marks intended to be used for recording that matter As per section 62 of the Indian Evidence Act, primary evidence means the document itself produced for the inspection of the court. As per section 29 of the Indian Penal Code, “document” is any matter expressed or described intended to be used as evidence . Prof.Shantilal Hajeri

55. Instrument As per section 2 of the Indian Stamp Act, an instrument is a document by which any right or liability is created, transferred, limited, extended, extinguished or recorded. Prof.Shantilal Hajeri

56. Examples of documents Pass book, Statement of Account, Date of Birth Certificate, Application forms, Affidavits , Pass Ports, Cheques issued, Money receipts, Declarations , Letters , Travel Documents, Prof.Shantilal Hajeri

57. Examples of documents E Records, Emails, SMSes , WhatsApp Chats and printouts, Correspondence , Bills , Invoices , Educational certificates, Appointment letters, Salary Certificates, Copies of Adhar Cards, PAN Cards, Driving Licenses, etc Prof.Shantilal Hajeri

58. Examples of Loan related documents Application for Loan, Agreement for Loan Promissory Note, Guarantee Bond Lien Letter, Letter of continuing Guarantee Pledge Deed, Hypothecation Deed, Mortgage Deed Statement of Account of Loan Prof.Shantilal Hajeri

59. Examples of Loan related documents Copies of the notices and Acknowledgements Letters received from Borrower and Guarantor Acknowledgement of Debt Authority Letter to deduct installments Post Dated Cheques Balance Sheets, Profit and Loss Statements Quotations, Stock Statements Project Reports, Business Plans submitted by borrower Prof.Shantilal Hajeri

60. Classification of documents Commercial Documents : Eg . Invoice, Purchase Order, Bill of Entry, Financial Documents: Eg . Bill of Exchange, Cheque , Statement of Account, Pass Book, etc Transport Documents: Eg . Bill of Lading, Lorry Receipt, Railway Receipt, Post Parcel receipt, Airway Bill, Currier Receipt Risk Covering Documents: Eg . Insurance Policy Official / Regulatory Documents. GST Registration, Pan Card, MSMEregistration Miscellaneous Documents. Date of Birth Certificate, Adhar (UID) Card ,, Education Certificates . Prof.Shantilal Hajeri

61. S E L W E R test for Documentation T o be recognized by a Court, the documents should pass each item of the “ S E L W E R test ” S : STAMP ACT E : EVIDENCE ACT L : LIMITATION ACT W: WITNESSES E : EXECUTION R : REGISTRATION ACT Prof.Shantilal Hajeri

62. Prof.Shantilal Hajeri

63. Stamp duty on documents The documents like Promissory Note, Usance Bill of Exchange require stamp duty as per the Indian Stamp Act. Certain other documents like agreements, hypothecation deeds, guarantee letter etc attract stamp duty as per respective state stamp Acts. Prof.Shantilal Hajeri

64. The list of the instruments The list of the instruments chargeable with stamp duty as given in the schedule 1 of the Indian Stamp Act, 1899 are as under:- Adoption Deed, Acknowledgement of Debt, Affidavit, Agreements, Pledge, P ower of Attorney, Usance Bill, Bill of Lading, Bond, Debenture, Conveyance Deed, Exchange of Property, Gift, hiring agreements, Insurance, Indemnity Bonds, Lease Agreements, Share Certificates, Letter of Credit, Guarantee, Articles of Association, M emorandum of Association, Mortgage deed, P artition deed, Partnership Deed, Promissory Note, Protest of a Bill, Transfer of Shares and Debentures, Warranty of goods, etc. Prof.Shantilal Hajeri

65. Multiple facilities As per section 5, if an instrument contains several distinct matters, stamp duty should be paid on the aggregate amount. For example if you have executed a hypothecation deed for a term loan of Rs.5.00 lacs and a cash credit facility of Rs.3.00 lacs , then the stamp duty should be paid as per the rate applicable for Rs.8.00 lacs . In case of renewal of facility for the same amount fresh stamp duty is not advolerm . In case of enhancement of facility stamp duty will be on the difference amount. Prof.Shantilal Hajeri

66. Type of Stamp duty The stamps which can be pasted on printed documents are called adhesive stamps. Franking machines have become popular after the recent scam Non judicial stamp papers. As per section 12, if an adhesive stamp is not cancelled the instrument will be deemed to be unstamped. As per section 17, an instrument should be stamped before or at the time of execution of documents. It cannot be stamped afterwards . Prof.Shantilal Hajeri

67. Non judicial stamp papers A part of the contents can be written on the stamp paper and the remaining part can be continued on the white paper. In this case the judicial stamp paper should be treated as first page A ttach the printed document to stamp paper. Take signature of the signatories at the joint in respect of all joints covering both pages Fill all the blanks before obtaining the signature. Don’t hand over the unfilled but signed document to the borrower. Prof.Shantilal Hajeri

68. U nder stamped or unstamped If the value of the stamp duty used is less than required stamp duty it is called under stamped . If no stamp duty is affixed it is called unstamped. As per section 31, if an instrument is unstamped or under stamped, collector of stamps can confiscate/impound the instruments . As per section 35, an instrument not duly stamped cannot be admitted as evidence in the Court of Law. It can be regularised by paying 10 time the stamp duty Prof.Shantilal Hajeri

69. Time limit of Stamp duty Stamp paper should be used within 6 months from the date of purchase. If not sued you can surrender it and claim refund. A stamp paper purchased today cannot be used for creating a document as of past date. If a stamp paper is purchased on 10-7-2022, it cannot be used after 10-1-2023 and it cannot be used for a transaction done before 10-7-2022. Prof.Shantilal Hajeri

70. Who has to pay Stamp duty As per section 29, the stamp duty should be paid by the person executing the documents The stamp paper should be purchased in the name of a party to a contract. If there is a contract between X and Y the stamp papers should be purchased in the name of X or Y. The stamp papers purchased in the name of third parties cannot be used. Prof.Shantilal Hajeri

71. Indian Evidence Act As per section 62 of the Indian Evidence Act, primary evidence means the document itself produced for the inspection of the court. As per section 61 of the Indian Evidence Act, the contents of a document may be proved either by primary or secondary evidence. As per section 59 of the Indian Evidence Act, all facts except the contents of document may be proved by oral evidence. Proving a fact becomes easy with the help of a documentary evidence. Prof.Shantilal Hajeri

72. Limitation Act: The purpose of limitation act is to fix a time frame within which an aggrieved party can go to court to enforce his rights . How long can you preserve these documents? You cannot be expected to preserve your documents for ever. Hence , the Limitation Act comes to your risqué Prof.Shantilal Hajeri

73. Preservation of Records The Limitation Act prescribes the time limit within which an aggrieved party can go to Court to enforce his rights. You can renew the validity period of the documents by a fresh written agreement with the counter party regarding extension of limitation period Once , that period is over, you can destroy your old records. It means you have to preserve al l the relevant documents till the limitation period in respect of that transaction is not yet over. Prof.Shantilal Hajeri

74. P eriod of limitation The period of limitation is as under; Money suit : 3 years Mortgage suit : 12 years Suit for decree : 3 years Execution of decree : 12 years The period of limitation starts from the date of cause of action. Prof.Shantilal Hajeri

75. Witnesses The documents which require witnesses must be signed by the witnessess. The identity of the witnesses such as name and address should be preserved. Examples: nomination by illiterate, Mortgage deed, Lease agreements, Will etc Prof.Shantilal Hajeri

76. Execution of documents Execution means: 1. Filling up of all blanks, 2. Signature by all parties preferably on all pages and also on joints to show the continuety of the documents. 3. Affixing rubber stamps or common seals wherever applicable 4. Signature by witnesses Prof.Shantilal Hajeri

77. Precautions for Execution of documents Signatories in official capacities should show the capacity in which they are signing such as Partner, Director, PA Holder Rubber stamps and Company seals Signatures should be obtained in the Bank premises in presence of Bank officer Prevent overwritings. Use same ink and same hand writing through out Hand writing should be legible. Preserve the documents in safe custody in secure water proof envelopes Prof.Shantilal Hajeri

78. Registration The documents needed to be regisgtered must be registered within the prescribed time limit. For Example: Mortgage Deed, Will with Sub Registrar Charge on the assets of a company with ROC Trust Deed with Charity Commissioner Prof.Shantilal Hajeri