RETHINKING ABOUT THE ABOLITION OF THE DOCTRINE OF

CONSOLIDATION OF MORTGAGES

Mortgage is the transfer of an interest in specific immovable property for the

purpose of securing the payment of money advance or to be advanced by way of
loan. And consolidation of mortgages is the process to facilitate the mortgagee
to recover his money given to the mortgagor, if the same person by separate
mortgages two different properties to the same mortgagee, then seeks to exercise
his equitable right to redeem one of the properties, the mortgagee can require
him to redeem both or neither. Through this paper I will discuss consolidation of
mortgages, its abolition and how it affected the interest of both the mortgagor
and mortgagee, the main focus of which is to combine section 61 with section
67A of Transfer of Property Act 1882, and the feasibility of the revival of the
doctrine of consolidation.
Consolidation in the Maxim of Equity, English law and its abolition:
Another application of the principle "he who seeks equity must do equity" is in
the doctrine of consolidation. In its simplest form this means that if the same
person by separate mortgages two different properties to the same mortgagee,
then seeks to exercise his equitable right to redeem one of the properties, the
mortgagee can require him to redeem both or neither; otherwise the mortgagor
might be able to redeem a property that was a more than adequate security for
the loan made on it, leaving the mortgagee with a property that was an
inadequate security for the loan made on that property..
Under English law the right to redeem after due date was an equitable relief.
Accordingly, under the maxim that he who seeks equity must do equity, the
mortgagor seeking to redeem one of several mortgages was put on terms that he
should redeem all. It was a condition imposed by equity on the right to redeem
given by equity. It did not arise so long as there was a legal right to redeem. But
when that was lost the mortgagee was entitled to consolidate the mortgages, to
treat them as one and to decline to be redeemed as to any unless he was
redeemed as to all. Thus in illustration to the old section if A had not redeem Y,
at due date, B was entitled to refuse redemption of Z, unless it was also
redeemed.
This equity was abolished in England as from 1882 by section 17 of the
conveying and Law of Property Act 1881 and now reenacted in section 93 of the
Law of Property Act 1925,except where a contrary intention appears in the

mortgage deed. It is however, usual in England to exclude the section by express

words in the mortgage. The equity in India was abolished by section 61 which
also saves contract to the contrary. As stated in Section 61 of Transfer of
Property Act 1882 A mortgagor who has executed two or more mortgages in
favour of the same mortgagee shall, in the absence of a contract to the contrary,
when the principal money of any two or more of the mortgages has become due,
be entitled to redeem any one such mortgage separately, or any two or more of
such mortgages together.
Contract to the contrary is effective :
The parties themselves may exclude the operation of the section of mortgage
may allow the mortgagee to consolidate . but a provision to that effect must be
explicit must be explicit . If there is a stipulation for simultaneous redemption in
the subsequent mortgage of the same property, this is equivalent to a contract for
consolidation and the mortgages cannot be redeemed separately. As explained in
the notes on sec 60, such a stipulation is not a clog on redemption. In an
Allahabad case the first mortgage was by two covenanted to pay before
redeeming the first mortgagee. This was held not to be a contract of
consolidation but to be a provision fixing time for payment.
The effect of a covenant for consolidation was much debated in a Full bench
decision of the Allahabad High Court. The mortgagor had made a usufructuary
mortgage of his occupancy holding and then took further advances and
executed two bonds covenanted not to redeem the usufructuary mortgage until
these subsequent advances had been paid off. Now a transfer of an occupancy
holding is forbidden by the Agra Tenancy Act 12 of 1881, but the Allahabad
High Court had held that an usufructuary mortgage in so far as it is a transfer of
a right to occupancy of a right to possession is valid.

Mortgagee bound to consolidate under section 67A :

But there is one type of consolidation which is for the mortgagee and the
mortgagee is bound to do so when he forwards for suit, under section 67A of
Transfer of property. According to section 67A of Transfer of Property Act 1882
"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".

Section 67A is the counterpart of section 61 which deals with the mortgagors
right of redemption. The principle of consolidation is abolished by section 61 as
regards mortgagors, and a mortgagor who has given different mortgages of
different properties or successive mortgages of the same property is entitled to
redeem each mortgage separately.But the principle of consolidation which is
abolished as regards the mortgagor is applied by this section to the mortgagee. If
the mortgagee holds different mortgages of different properties or successive
mortgages of the same property from the mortgagor, he must enforce all or
none, unless there is a contract to the contrary.

The right to consolidate exists not only in the simple case mentioned above,
but also whenever the following conditions are satisfied:
Both mortgages were made by the same mortgagor.
Either (a) the equities of redemption (i.e. the properties, subject to the mortgages
thereon) are in one hand and the mortgages in another single hand, or (b) the
position as at (a) has existed at some time in the past since when the equities of
redemption have become separated.
The law was summarized in this sense in the leading case of Pledge v. White' in
the House of Lords.
Example I
A mortgages Smith to B.
A mortgages Brown to C.
B and C transfer their mortgages to D.
If A then seeks to redeem one of the two properties. D can consolidate, i.e. can
require A to pay off the mortgages on both properties or not redeem at all.
Rule (ii) above is here satisfied under (ii) (a).
Example 2
A mortgages Smith to B.
A mortgages Brown to C.

A sells Smith, subject to the mortgage thereon, to X.

B and C transfer theft mortgages to D.
If X or A seeks to redeem his property (Smith or White acre, respectively) D
cannot consolidate. Rule (ii) above is not satisfied because there has never been
a moment of time when both the properties have been in one hand and both the
mortgages in another single hand: the properties had become separated before
the mortgages fell into one hand.
Example 3
A mortgages Smith to B.
A mortgages Brown to B.
A sells Smith, subject to the mortgage thereon, to X.
If X or A seeks to redeem his property B can consolidate.
Rule (ii) is satisfied under (ii) (b). It will be observed that in this case, as a
condition of paying off the mortgage on his own property, X or A can be
required to pay off the mortgage on the other property: that mortgage will not
then be discharged, but will be transferred to the person making the payment off
(i.e. X or A. as the case may be).'

Justification of the abolition of the doctrine of Consolidation and the revival

of it :
There is a justification of the abolition of the doctrine of consolidation, when the
person mortgaged the property then he may not be able economically to redeem
all of his properties, and he is only able to redeem one of his properties
mortgaged. In the circumstance mentioned above there is no way for the
mortgagor other than to redeem only one of his properties. At this situation it is
better for him to redeem separately. But if the consolidation was not abolished
he could not redeem only one of his properties mortgaged. But this justification
seems vain when it is observed that the mortgagor cunningly redeems his
valuable property which has a good market value but he is not redeeming his
property of less value, at that time the mortgagee had to suffer from frustration
whether the mortgagor will redeem rest of his property of less value or not,
whether he will suffer loss in case of money gave as a loan as opposed to that

mortgaged property. Because of the abolition of the system of consolidation the

mortgagor has an option to defraud the mortgagee ,for this reason doctrine of
consolidation of mortgages must be revived and section 61 of Transfer of
Property Act 1882 to be amended.

Effect of the abolition of the doctrine of Consolidation:

As the law relating to consolidation has been changed, it is now clear that even
if the mortgages are of the same property, the mortgagor may redeem each
separately unless restrained by a contract to the contrary. The effect of the
amendment is to abolish the consolidation of mortgages whether in respect of
the same properties or different properties.
Redemption of every separate mortgage should be permitted unless there is
clear and unequivocal evidence to prove a contract between the parties to the
contrary.(1).(2)Where there is no specific contract on behalf of the parties with
regard to consolidation, the consolidation of several mortgages and amounts due
under them in the same decree is illegal.
The mortgagors as a body could not be precluded from exercising their right to
redeem the entire property mortgaged just because some of the mortgagors had
executed deeds of further charge in favour of the mortgagee. The mortgagee has
no case for making the plaintiffs pay off the deeds of further charge in that suit
but he should enforce them by separate proceedings.(3).Where the father of a
joint family executed a mortgage of family property by way of conditional sale
and after his death, his sons, one of them being the manager, executes another
mortgage expressly stipulating that they will have no power to redeem the
property without payment of the previous mortgage money and the amount of
the latter in a lump sum, the mortgagee has a right to consolidate the two
mortgages and insist on payment of both before redemption, as the stipulation
for simultaneous redemption amounts to a contract for consolidation. The fact
that a suit on one of the mortgages could be barred by limitation on the date does
not defeat the mortgagee's claim to consolidation, because there is no limitation
to a claim pleaded in defense, and because the mortgagee's claim cannot be
extinguished so long as his lien by possession exists.,(4)
The abolition of the Doctrine of Consolidation badly affects the mortgagee`s
right :

Because of the abolition of consolidation by section 61 of Transfer of Property

Act 1882, the mortgagee has lost some rights to some extent which he had
before. Before the abolition of the equity of Consolidation, if the mortgagor
wanted to redeem one of the properties mortgaged, the mortgagee could compel
the mortgagor to redeem all the property mortgaged, it was the right given to the
mortgagee by equity. Consolidation of mortgage worked as an extra tool of
security for the mortgagee in case of his loss .But the case is different now,
presently the mortgagee cannot exercise this right, for this reason section 61 of
Transfer of Property Act 1882 is not favourable for the mortgagee. On the other
hand this section 61 is favourable for the mortgagor, because now the mortgagor
can redeem his property separately or simultaneously which is a right for the
mortgagor which he had not before.

Recommendations:
Equity of consolidation is compatible with the rule of Equity and natural justice,
must be reinforced through the amendment of the section 61 of Transfer of
Property Act 1882 for the extra security of the mortgagee. Without the system of
consolidation the mortgagee may sustain some sort of insecurity in terms of his
security, so I think that Equity of Consolidation must be revived. Section 61 as
well as section 67A of Transfer of Property Act 1882 should be combined as to
facilitate the mortgagor and the mortgagee in a fair and equitable basis.
Conclusion:
Mortgage is a creation to facilitate the people to have help in a proper time when
they need money, and it helps the mortgagee by giving proper guarantee of his
money given to the mortgagor. Reviving of the system of equity of consolidation
may create adequate security for the mortgagee and it may encourage the people
for the transaction like mortgage.As the system of the consolidation of
mortgages is the creation of equity it ensures justice and good conscience as to
facilitate the fair transaction like mortgage.Mortgage will be more decorated and
human friendly if it ensures the consolidation of mortgages for both the
mortgagor and the mortgagee.