October 4, 2022

Mortgage Laws in India

Transfer of property Act, 1882, (hereinafter called as “TPA”) discuss the law of provisions in chapter IV, from section 58 to section 99. However, section 99 which was related to attachment of mortgaged property is repealed by the Code of Civil Procedure, 1908 (5 of 1908), s. 156 and the Fifth Schedule.

Thus, Mortgage provisions are discussed from section 58 to 98.

DEFINITION OF MORTGAGE TERMS

Section 58 defines these terms in following ways-

  • Mortgage- A mortgage is the transfer of an interest in specific immoveable 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.
  • Mortgagor- The transferor who mortgaged the immovable property, is called a mortgagor.
  • Mortgagee-  To whom, he transfers the property, is called the “Mortgagee”.
  • Mortgage-money- The principal money and interest of which payment is secured for the time being are called the mortgage-money.
  • Mortgage-deed- The instrument by which the transfer is effected is called a mortgage-deed.

TYPES OF MORTGAGE

In India, TPA mention 6 types type of mortgage. Which are as follows-

  • In simple mortgage, the mortgagor, without delivering possession of the mortgaged property,
  • 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 the mortgage-money.
  • Where, the mortgagor ostensibly sells (Mortgagee buy but don’t become the absolute owner) the mortgaged 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, or
  • on condition that on such payment being made the buyer shall transfer the property to the seller, the transaction is called mortgage by conditional sale and the mortgagee a mortgagee by conditional sale.

It should be notes 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.

  • Where the mortgagor delivers possession or
  • expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee, and
  • authorizes 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, or
  • in payment of the mortgage-money, or
  • partly in lieu of interest or partly in payment of the mortgage-money, the transaction is called an usufructuary mortgage and the mortgagee an usufructuary mortgagee.

The characteristics of a usufructuary mortgage, as defined above, are:

  • that the possession of the mortgaged property is delivered, or agreed to be delivered, to the mortgagee;
  • that he is to appropriate the rents and profits either
  • in lieu of interest, or
  • towards the principal, or
  • partly in lieu of interest and partly in payment of the principal;
  • that in none of these cases the mortgagor incurs any personal liability to repay; and
  • as the mortgagor has not bound himself to repay (but may repay if and when he chooses) there can be no “forfeiture” and therefore the remedies by way of foreclosure or sale are not open to the mortgagee.

Thus, any personal liability on the part of mortgagor is excluded in case of usufructuary mortgage and a usufructuary mortgagee is not entitled to sue for sale of the property. If there is any stipulation to the contrary, the transaction ceases to be one of usufructuary mortgage and is described as anomalous mortgage. The Court proceeded to hold as under:

As stated in (2) above, usufructuary mortgages are of three kinds. Of these, the two described in (b) and (c) are self redeeming; the mortgagee has to look to the rents and profits only to re-pay himself and when his entire charge is so liquidated he must re-deliver possession of the mortgaged property to the mortgagor free from all encumbrances.

The most common form of usufructuary mortgage however is that described in 2(a) above, and it is to this class that the mortgages in the cases before us belong. Here the rents and profits are to be set off against interest and the mortgagee is entitled to retain possession until such time as the mortgagor chooses to redeem on payment of the principal sum secured. This form’ of mortgage has been in vogue in India since ancient times. It was known to the Hindu lawyers under the expressive name of bhog bandakam which literally means “mortgage (bandaka) by enjoyment (bhog).” It was a mortgage for an indefinite period, during which the mortgagee enjoyed the usufruct and the mortgagor was entitled to redeem at any time on payment of the principal. It retained its popularity during the Mughal period, especially among the Mohammedan creditors who by obtaining possession of property (as zer-i-peshgi lessee and under other similar names) and appropriating the rents and profits till redemption, could find a safe investment for their money without charging interest.

The Court concluded to the following effect:

It will be clear from the foregoing discussion that the principal characteristics of a usufructuary mortgage are that there is no personal liability of the mortgagor to pay, nor has the mortgagee a right to have the mortgaged property brought to sale.

Judged in this light, it must be conceded that a usufructuary mortgagor is under no liability to mortgagee. He is under no legal obligation to pay; it is his option to redeem, if and when he chooses…. [1]

  • Where the mortgagor binds himself to repay the mortgage-money on a 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.
  • 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 immoveable property,
  • with intent to create a security thereon, the transaction is called a mortgage by deposit of title-deeds.

EXAMPLE OF TITLE DEEDS[2]

Title deeds or title documents are the documents which evidence ownership, whether freehold or leasehold, of any property.  For example-

  • Allotment Letter
  • Receipts evidencing  Payments made.
  • Possession Letter, if applicable
  • Share Certificate.
  • Revenue records
  • Lease Deed
  • Conveyance Deed
  • Sale deed / Gift deed / Exchange deed
  • Relinquishment Deed
  • Will

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.

There may be any type of mortgage which prevails in any locality, this anomalous mortgage tries to recognize those types.

NAME OF SUITS IN MORTGAGE

  • Mortgagor has a right of redemption (see below discussion) after payment of loan, and suit to enforce this right is called “suit for redemption”. (section 60).
  • But if mortgagor is failed to pay the amount of loan then mortgagee has a right to sale the mortgaged property, and the suit to enforce this right is called “suit for sale
  • A suit to obtain a decree that a mortgagor shall be absolutely debarred of his right to redeem the mortgaged property is called a suit for foreclosure.

RIGHT AND LIABILITIES OF MORTGAGOR

Rights of mortgagee are the duties of mortgagor and vice versa. TPA discuss the right and liabilities of mortgagor and mortgagee from section 60 to section 76. And it could be explained in following heads-

RIGHT OF MORTGAGOR

Following are the rights given to a mortgagor given by the Transfer of Property Act, 1882:

  1. Right to redemption (section 60) (suit for redemption)
  2. Right to transfer mortgaged property to a third party instead of retransferring (section 60A)
  3. Right of inspection and production of documents (section 60B)
  4. Right to redeem separately or simultaneously (section 61)
  5. Right to accession (section 63)
  6. Right to improvements (section 63A)
  7. Right to a renewed lease (section 64)
  8. Right to grant a lease (Section 65A)
  9. RIGHT TO REDEMPTION (SECTION 60)

A mortgagor has a right to redemption after due payment of loan is done at a proper time and place. Mortgagee is required,

  • to deliver to the mortgagor the mortgage-deed and all documents relating to the mortgaged property which are in the possession or power of the mortgagee,
  • where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, and
  • at the cost of the mortgagor either to re-transfer the mortgaged property
  • to him or
  • to such third person as he may direct, or
  • to execute and to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee, has been extinguished.

It should be noted that the right conferred by this section has not been extinguished by act of the parties or by decree of a Court.

Section also provides that, if the time fixed for payment of the principal money has been allowed to pass or no such time has been fixed. the mortgagee shall be entitled to reasonable notice before payment or tender of such money.

Redemption of portion of mortgaged property. —Nothing in this section shall entitle a person interested in a share only of the mortgaged property to redeem his own share only, on payment of a proportionate part of the amount remaining due on the mortgage, except 1[only] where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has or have acquired, in whole or in part, the share of a mortgager.

  1. RIGHT TO TRANSFER MORTGAGED PROPERTY TO A THIRD PARTY INSTEAD OF RETRANSFERRING (SECTION 60A)

A mortgagor, who is entitled to redemption, instead of re-transferring the mortgaged property to himself, he may direct the mortgagee to assign the mortgage-debt and transfer the mortgaged property to a third person. And the mortgagee shall be bound to assign and transfer accordingly.

WHO CAN ENFORCE THE RIGHT UNDER THIS SECTION?

The rights conferred by this section may be enforced by the mortgagor or by any encumbrancer.

But the requisition of any encumbrancer shall prevail over a requisition of the mortgagor and, as between encumbrancers, the requisition of a prior encumbrancer shall prevail over that of a subsequent encumbrancer.

(3) The provisions of this section do not apply in the case of a mortgagee who is or has been in possession.  

  1. RIGHT OF INSPECTION AND PRODUCTION OF DOCUMENTS (SECTION 60B)

A mortgagor has a right to inspect and make copies or abstracts of, or extract from, document of title deeds of his property, which are in the custody or power of the mortgagee. He can do these things as long as his right of redemption exists.

And he is required to do all these things-

  • at all reasonable times,
  • at his own cost, and
  • on payment of the mortgagee’s costs and expenses in this behalf.
  1. RIGHT TO REDEEM SEPARATELY OR SIMULTANEOUSLY (SECTION 61)

If a mortgagor executed two or more mortgages in favor of the same mortgagee, he can redeem his anyone such mortgage separately, or any two or more of such mortgages together.

However, both parties can regulate terms regarding such redemption by making a contract in this regard. 

  1. RIGHT TO ACCESSION (SECTION 63)

During the continuance of mortgage, if mortgaged property received any accession, the mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be entitled as against the mortgagee to such accession.

ACCESSION ACQUIRED ON THE EXPENSES OF MORTGAGEE

  • Where accession has been acquired at the expenses of the mortgagee, and it is capable of separate possession or enjoyment without detriment to the principal property. In such case, If the mortgagor desire to take the accession, he must pay to the mortgagee the expense of acquiring it.
  • But If such separate possession or enjoyment is not possible, the accession must be delivered with the property. the mortgagor being liable, in the case of an acquisition necessary to preserve the property from destruction, forfeiture or sale, or made with his assent, to pay the proper cost thereof, as an addition to the principal money, [with interest at the same rate as is payable on the principal, or, where no such rate is fixed, at the rate of nine per cent. per annum]. And if there is any profit arising from the accession, it shall be credited to the mortgagor.
  1. RIGHT TO IMPROVEMENTS (SECTION 63A)

If mortgaged property in possession of the mortgagee has been improved during the continuance of the mortgage, in such case, the mortgagor shall be entitled to the improvement upon redemption of the property. And mortgagor shall not be liable to pay the cost, except in the following cases-

  • Where any such improvement was effected at the cost of the mortgagee and was necessary to preserve the property from destruction or deterioration or
  • was necessary to prevent the security from becoming insufficient, or
  • was made in compliance with the lawful order of any public servant or public authority,

the mortgagor shall, be liable to, pay the proper cost thereof as an addition to the principal money with interest at the same rate as is payable on the principal, or, where no such rate is fixed, at the rate of nine per cent. per annum, and the profits, if any, accruing by reason of the improvement shall be credited to the mortgagor.

MORTGAGE PROPERTY ON LEASE (R)

Section 64 and 65A, gives the power to mortgagor to grant and renew the lease on mortgaged property.

A mortgagor, while lawfully in possession of the mortgaged property, shall have power to make leases thereof which shall be binding on the mortgagee. But while making leases he is required to follow conditions below-

  • Every such lease shall be such as would be made in the ordinary course of management of the property concerned, and in accordance with any local law, custom or usage.
    • Every such lease shall reserve the best rent that can reasonably be obtained, and no premium shall be paid or promised and no rent shall be payable in advance.
    • No such lease shall contain a covenant for renewal.
    • Every such lease shall take effect from a date not later than six months from the date on which it is made.
    • In the case of a lease of buildings, whether leased it or without the land on which they stand, the duration of the lease shall in no case exceed three years, and the lease shall contain a covenant for payment of the rent and a condition of re-entry on the rent not being paid within a time therein specified. (SECTION 65A)

Where the mortgaged property is a lease, and the mortgagee obtains a renewal of the lease, the mortgagor, upon redemption, shall, have the benefit of the new lease. (SECTION 64)

71. Renewal of mortgaged lease. —When the mortgaged property is as lease, and the mortgagor obtains a renewal of the lease, the mortgagee, in the absence of a contract to the contrary, shall, for the purposes of the security, be entitled to the new lease.

DUTIES OF A MORTGAGOR

Along with the rights given to a mortgagor, the Transfer of Property Act has also conferred some duties on him. Following are the duties of a mortgagor:

  1. DUTY TO AVOID WASTE (SECTION 66)

If mortgaged property is in the possession of mortgagor, he can deteriorate the property and he is not liable to mortgagee for allowing the deterioration.

but he must not commit any act which is destructive or permanently injurious thereto, if the security is insufficient or will be rendered insufficient by such act.

WHEN IS SECURITY INSUFFICIENT?

A security is insufficient within the meaning of this section unless,

  • the value of the mortgaged property exceeds by one-third, or,
  • if consisting of buildings, exceeds by one-half,
  • to the amount (mortgage money) for the time being due on the mortgage.

RIGHT AND LIABILITIES OF MORTGAGEE

  1. Right to foreclosure or sale (section 67) (suit for foreclosure)
  2. Right to sue for mortgage money (section 68)
  3. Power of sell without the intervention of the court, when valid (section 69)
  4. Rights of mortgagee in possession (section 72)
  5. Right to proceeds of revenue sale or compensation on acquisition (section 73)
  1. RIGHT TO FORECLOSURE OR SALE (SECTION 67)

The mortgagee has a right, after the mortgagor money has become due to him, to obtain a decree from the court

  • for the absolute debarment of mortgagor’s redemption right.
  • or a decree that the property be sold.

But he can’t obtain the decree if

  • a decree has been made for the redemption of the mortgaged property, or
  • the mortgage-money has been paid or deposited.

The section further clarified that this section does not authorize—

  • to a mortgagee, other than mortgagee by conditional sale and anomalous mortgagee to institute a suit for foreclosure;
  • to usufructuary mortgagee or mortgage by conditional sale to institute a suit for sale;
  • to a mortgagor who holds the mortgagee’s rights as his trustee or legal representative, and who may sue for a sale of the property, to institute a suit for foreclosure;
  • to the mortgagee of a railway, canal or other work in the maintenance of which the public are interested, to institute a suit for foreclosure or sale; or
  • to a person interested in part only of the mortgage-money to-institute a suit relating only to a corresponding part of the mortgaged property, unless the mortgagees have, with the consent of the mortgagor, severed their interests under the mortgage.

MORE THAN ONE MORTGAGOR AND ENCUMBRANCER

  • to a person interested in part only of the mortgage-money to-institute a suit relating only to a corresponding part of the mortgaged property, unless the mortgagees have, with the consent of the mortgagor, severed their interests under the mortgage. (section 67)

67A. Mortgagee when bound to bring one suit on several inortgages.—A mortgagee who holds two or more mortgages executed by the same mortgagor in respect of each of which he has a right to obtain the same kind of decree under section 67, and who sues to obtain such decree on any one of the mortgages, shall, in the absence of a contract to the contrary, be bound to sue on all the mortgages in respect of which the mortgage-money has become due.

  1. RIGHT TO SUE FOR MORTGAGE MONEY (SECTION 68)

The mortgagor has a right to sue for the mortgage money, only in the following cases-

  • where the mortgagor binds himself to repay the same;
  • where, by any cause other than the wrongful act or default of the mortgagor or mortgagee, the mortgaged property is wholly or partially destroyed or the security is rendered insufficient as per the meaning of section 66, in such a case, the mortgagee has given the mortgagor a reasonable opportunity of providing further security enough to render the whole security sufficient, and the mortgagor has failed to do so;
  • where the mortgagee is deprived of the whole or part of his security by or in consequence of the wrongful act or default of the mortgagor;
  • where, the mortgagee being entitled to possession of the mortgaged property, the mortgagor fails to deliver the same to him, or to secure the possession thereof to him without disturbance by the mortgagor or any person claiming under a title superior to that of the mortgagor:

Provided that, in the case referred to in clause (a), a transferee from the mortgagor or from his legal representative shall not be liable to be sued for, the mortgage-money.

  1. POWER OF SELL WITHOUT THE INTERVENTION OF THE COURT (SECTION 69)

A mortgagee, or any person acting on his behalf, shall have the power to sell the mortgaged property, or any part of the property, in default of the payment of mortgaged money, without the intervention of the court.

But this power can be exercised only in the following cases-

  1. where the mortgage is an English mortgage, and neither the mortgagor nor the mortgagee is a Hindu, Muhammadan or Buddhist;
  • where a power of sale without the intervention of the Court is expressly conferred on the mortgagee by the mortgage-deed, and the mortgagee is the Government;
  • where a power of sale without the intervention of the Court is expressly conferred on the mortgagee by the mortgage-deed, and the mortgaged property or any part thereof was, on the date of the execution of the mortgage-deed, situate within the towns of Calcutta, Madras, Bombay.

Clause (a) of this sub-section excludes the Hindu, muhammadan or Buddhist to exercise this power, it is obvious that, this section was enacted to give the power to Britishers.

A feature of the English mortgage was originally confined to Englishmen or to Indian residents in the Presidency Towns who were conversant with the forms of English mortgage and English law and procedure as administered in the Presidency Towns. In the mofussil, prior to the Transfer of Property Act, there were certain regulations governing the law of mortgages between the parties who were not Europeans. Those regulations did not empower the mortgagee to effect sale of the mortgaged property without the intervention of the court.

Section 69 of the Transfer of Property Act, 1882, was modelled on the English Conveyancing Act, 1881 and the English Law of Property Act, 1925. Section 69 was later remodelled by amending Act 20 of 1929 drawing the principles from the English law.

The Supreme Court in Narandas Karsondas v. S.A. Kamtam held that the conferment of power on mortgagee to sell without intervention of the court in a mortgage deed by itself will not deprive the mortgagor of his right of redemption. The equity of redemption is not extinguished by mere contract for sale. Therefore, until sale is complete by registration the mortgagor does not lose his right of redemption. In view of the fact that only on execution of conveyance ownership passes from one party to another, it cannot be said that the mortgagor lost the right of redemption just because the property was put to auction. The mortgagor has a right to redeem unless the sale of property was complete by registration in accordance with the provisions of the Registration Act.

Sub section (2) further clarifies that No such power shall be exercised unless and until—

  • notice in writing requiring payment of the principal money has been served on the mortgagor, or, one of several mortgagors, and default has been made in payment of the principal money, or of part thereof, for three months after such service; or
  • some interest under the mortgage amounting at least to five hundred rupees is in arrear and unpaid for three months after becoming due.

When a sale has been made by exercising the power given under this section, the title of the purchaser shall not be impeachable on the ground that

  • no case had arisen to authorize the sale, or
  • due notice was not given, or
  • the power was otherwise improperly or irregularly ‘exercised;

However, if any person damnified by an unauthorized, or improper, or irregular’ exercise of the power shall have his remedy in damages against the person exercising the power.

USING OF MONEY WHICH IS RECEIVED FORM SALE

The money which is received by the mortgagee, arising from the sale, shall be use in the following ways-

  • discharge of prior incumbrances,
  • payment into Court under section 57 of a sum to meet any prior incumbrance,
  • payment of all costs, charges and expenses properly incurred by him as incident to the sale or any attempted sale;
  • discharge of the mortgage-money and costs and other money, if any, due under the mortgage;
  • and the residue of the money so received shall be paid to the person entitled to the mortgaged property, or authorized to give receipts for the proceeds of the sale thereof.
  1. RIGHT TO ACCESSION (SECTION 70)

If, after the date of a mortgage, any accession is made to the mortgaged property, shall, for the purposes of the security, be entitled to such accession.

 Illustrations

 (a) A mortgages to B a certain field bordering on a river. The field is increased by alluvion. For the purposes of his security, B is entitled to the increase.

 (b) A mortgages a certain plot of building land to B and afterwards erects a house on the plot. For the purposes of his security, B is entitled to the house as well as the plot.

  1. RIGHT OF MORTGAGEE IN POSSESSION (SECTION 72)

A mortgagee may spend such money as is necessary—

  • For the preservation of the mortgaged property from destruction, forfeiture or sole;
  • For supporting the mortgagor’s title to the property;
  • For making his own title thereto good against the mortgagor; and
  • When the mortgaged property is a renewable lease- hold, for the renewal of the lease;

For doing so, he may add such money to the principal money, at the rate of interest payable on the principal, and, where no such rate is fixed, at the rate of nine per cent. per annum.

In other words, this section embodies the duties of mortgagee to the mortgagor.

It should be noted that the expenditure of money by the mortgagee under clause (b) or clause (c) shall not be deemed to be necessary unless the mortgagor has been called upon and has failed to take proper and timely steps to preserve the property or to support the title.

WHERE THE PROPERTY INSURABLE

Where the property is by its nature insurable, the mortgagee may also, insure and keep insured against loss or damage by fire the whole or any pant of such property; and the premiums paid for any such insurance shall be added to the principal money with interest at the same rate as is payable on the principal money or, where no such rate is fixed, at the rate of nine per cent. per annum. But the amount of such insurance shall not exceed the amount specified in this behalf in the mortgage-deed or (if no such amount is therein specified) two-thirds of the amount that would be required in case of total destruction to reinstate the property insured.

Nothing in this section shall be deemed to authorise the mortgagee to insure when an insurance of the property is kept up by or on behalf of the mortgagor to the amount in which the mortgagee is hereby authorised to insure.

  1. RIGHT TO PROCEEDS OF REVENUE SALE OR COMPENSATION ON ACQUISITION. (SECTION 73)

If mortgaged property or any party of the property or any interest therein is sold due to failure to pay arrears of revenue or other charges of a public nature or rent which was due in respect of such property.

And if these failures did not arise from any default of the mortgagee, in such case, the mortgagee shall be entitled to claim of his mortgage money, either in whole or in part, from out of any surplus of the sale-proceeds remaining after payment of the arrears and of all charges and deductions directed by law.

And if mortgaged property or any part of it, is acquired under is acquired under the Land Acquisition Act, 1894 (1 of 1894), or any other enactment for the time being in force providing for the compulsory acquisition of immoveable property, in such case, the mortgagee shall be entitled to claim payment of the mortgage-money, in whole or in part, out of the amount due to the mortgagor as compensation.

Such claims shall prevail against all other claims except those of prior encumbrances, and may be enforced notwithstanding that the principal money on the mortgage has not become due.

LIABILITIES OF MORTGAGEE IN POSSESSION (SECTION 76)

Section 76 embodies the liabilities of mortgagee who has mortgaged property in possession.

It contains the following liabilities of mortgagee-

  • he must manage the property as a person of ordinary prudence would manage it if it were his own;
    • he must use his best endeavours to collect the rents and profits thereof;
    • he must, in the absence of a contract to the contrary, out of the income of the property, pay the Government-revenue, all other charges of a public nature and all rent accruing due in respect thereof during such possession, and any arrears of rent in default of payment of which the- property may be summarily sold;
    • he must, in the absence of a contract to the contrary, make such necessary repairs of the property as he can pay for out of the rents and profits thereof after deducting from such rents and profits the payments mentioned in clause (c) and the interest on the principal money;
    • he must not commit any act which is destructive or permanently injurious to the property;
    • where he has insured the whole or any part of the property against loss or damage by fire, he must, in case of such loss or damage, apply any money which he actually receives under the policy, or. so much thereof as may be necessary, in reinstating the property, or, if the mortgagor so directs, in reduction or discharge of the mortgage-money;
    • he must keep clear, full and accurate accounts of all sums received and spent by him as mortgagee, and, at any time during the continuance of the mortgage, give the mortgagor, at his request and cost, true copies of such accounts and of the vouchers by which they are supported;
    • his receipts from the mortgaged property, or, where such property is personally occupied by him. a fair occupation-rent in respect thereof shall, after deducting the expenses properly incurred for the management of the property and the collection of rents and profits and the other expenses mentioned in clauses (c) and (d), and interest thereon, be debited against him in reduction of the amount (if any) from time to time due to him on account of interest  and, so far as such receipts exceed any interest due, in reduction or discharge of the mortgage-money; the surplus, if any, shall be paid to the mortgagor;
    • when the mortgagor tenders, or deposits in manner hereinafter provided, the amount for the time being due on the mortgage, the mortgagee must, notwithstanding the provisions in the other clauses .of this section, account for his receipts from the mortgaged property from the date of the tender or from the earliest time when he could take such amount out of Court, as the case may be and shall not be entitled to deduct any amount therefrom on account of any expenses incurred after such date or time in connection with the mortgaged property.

Loss occasioned by his default. —If the mortgagee fail to perform any of the duties imposed upon him by this section, he may, when accounts are taken in pursuance of a decree made under this Chapter, be debited with the loss, if any, occasioned by such failure.

77. Receipts in lieu of interest.—Nothing in section 76, clauses (b), (d), (g) and (h), applies to cases where there is a contract between the mortgagee and the mortgagor that the receipts from the mortgaged property shall, so long as the mortgagee is in possession of the property, be taken in lieu of interest on the principal money, or in lieu of such interest and defined portions of the principal

RIGHT OF USUFRUCTUARY MORTGAGOR TO RECOVER POSSESSION (SECTION 62)

Where the mortgage is usufructuary and the accession has been acquired at the expense of the mortgagee, the profits, if any, arising from the accession shall, in the absence of a contract to the contrary, be set off against interest, if any, payable on the money so expended. (SECTION 63)

RIGHT AND LIABILITIES OF PARTIES TO ANAMALOUS MORTGAGE (SECTION 98)

In the case of an anomalous mortgage the rights and liabilities of the parties shall be determined by their contract as evidenced in the mortgage-deed, and, so far as such contract does not extend, by local usage.

CONCLUSION

Transfer of property act elaborated the right and duties of mortgagor and mortgagee in very detail. Further, it was interpreted by the Indian courts from every aspect. While concluding this paper, it should be noted that there are also other forms of mortgage other than mentioned in Transfer of property act and TPA also recognises those forms.


[1] Lachhman Singh v. Natha Singh through Harnam Singh and Ors. A.I.R. 1940 Lahore 401 (fb), see also ram kishan v. sheo ram 2007

[2] Rajesh Gupta from SNG partners, Immovable Properties And Creation Of Mortgage; finance and Banking (01 September 2017) https://www.mondaq.com/india/charges-mortgages-indemnities/625238/immovable-properties-and-creation-of-mortgage

This article is written by Arshi hayat Gnagohi. She is a lawyer, blogger at ababeelfolks and writes on laws, culture, books, cinema, food and literature.