Legal Question in Banking Law in India

Negative lien simply means the creator of a charge or mortgage covenants that he would not create any further charge on the property. Normally it is contained in the document creating the charge. Whether the deposit of title deeds form part of creation of negative lien depends upon the terms of loan document for which the title deeds are deposited. If it does not contain an undertaking not to create a future charge then only negative lien comes into operation. Otherwise not. If anybody who has created a negative lien violates the same, the creditor can hold him in default and sue for the debt.