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COURSE TITLE

T OPIC Mortgage
D ATE 14.04.2024
S ECTIONS §58 -

§58. DEFINITIONS OF MORTGAGE, MORTGAGOR, MORTGAGEE, ETC.

Mortgage is a:
(a) Transfer of Interest
(b) Specific Immovable Property
(c) Purpose of Securing:
i. Payment of money advanced or to be advanced by the way of a loan
ii. Existing or Future Debt
iii. Performance of an Engagement which may give rise to Pecuniary Liability
Herein,
- The transfer of interest is a security against the money
- Ownership of the property remains with the mortgagor
- Right in property is an accessory to the right to recover debt (Chetti Goudan v.
Sundaram Pillai)
- Right in rem
- An agreement to create a mortgage (no transfer of interest owed), does not confer any
interest, just legalises the obligation to repay the loan.
- A transfer by the way of discharging a debt, is not a mortgage
- A mortgage does not become ineffective, if the mortgagee does not immediately
transfer money (State of Kerala v. Cochin Chemical Refineries)
Mortgage Money: Principal amount transferred by the mortgagee to the mortgagor
Mortgage Deed: Document officialising the mortgage
(1) Simple Mortgage: Mortgagor bound personally, without delivering possession,
mortgagee can affect a sale in case of non – payment. [other properties of the
mortgagor included]
Herein, there is two – fold security, as the mortgagor takes personal obligation and
secondly, the property.
Remedy: Foreclosure, Money Decree
(2) Conditional Sale: Ostensible sale, no delivery of possession, default of payment on
certain date, makes it absolute and such payment shall void the sale, buyer shall
transfer the property to the seller.
Condition has to be embodied in the sale deed itself. (Sunil K. Sarkar v. Aghor K.
Basu)
No personal liability, contract executes itself into an absolute sale. [foreclosure]
Remedy: Foreclosure
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Difference between conditional sale and sale with right to repurchase is that a relation
of creditor – debtor exists and that a conditional sale only transfer some interest in
the property. It can be derived from the intention of the parties.
Chunchun Jha v. Shaikh Ibadat Ali – Two documents with sale and repurchase clause
implies no mortgage. But converse is not true.
Case of SC: Stamp Duty paid by the transferor instead of the transferee evidenced a
mortgage

Difference between:
(a) Relation of creditor and debtor in a mortgage
(b) Mortgage affected by a single document
(c) Debt subsists as a borrowing arrangement, but in sale, there is consideration
(d) Value of consideration is far below that of the property in a mortgage
(e) Right to Redemption persists even after deadline missed

(3) Usufructuary: Delivers possession, retain it till payment, rents and profits accruing
from the property, appropriate it in lieu of interest or mortgage money, wholly or
partly
No personal liability
Cannot foreclose, or sale deed
Amount is less than Rs.100, deed of registration or delivery, otherwise registration
In lieu of principle money – pays pm
In lieu of interest – debt
Cannot alienate the property
Mortgagor has right to recover possession
(4) English Mortgage: Repay mortgage money, certain date and transfers property
absolutely, re – transfer. Personal covenant
(5) Deposit of Title Deeds: Debt, Title Deeds Deposited, Redemption through Title Deeds
(6) Anomalous Mortgage: Not any of the above, can be Kanom, Otti, Peruartham, San
Less than 100, need not be delivered,

S.59 MORTGAGE BY ASSURANCE

Under Rs. 100 – through delivery or registered instrument
Over Rs. 100 – through registered instrument, 2 witnesses

S. 60 RIGHT TO REDEEM
Has the right to:
(a) Acquire documents relating to the mortgage
(b) Revert the possession of the mortgage
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(c) Re-transfer the interest to the mortgager or a third – party (at the cost of the
mortgager) and acknowledge in writing the cessation of their interest in the property
Provided that, this has not been extinguished by act of parties or decree of the Court.
Nothing in this Section allows for a part redemption of his share of property, through
payment of the proportionate part.
Right of Redemption – statutory right, as in no law or contract can deprave the mortgagor of
the same – a right to redemption subsists so long as a mortgage subsists. It can be
extinguished by a decree for foreclosure.
Once a mortgage, always a mortgage – indefeasible right. The right cannot be detached from
a mortgage.
Clog on Redemption – Stanley v. Wilde: “Any provision inserted to prevent redemption on
payment or performance of a debt or obligation for which a security was given is deemed as a
clog or fetter on redemption”.
Any such condition, is void ab initio, as per the settled position in Indian law.
Though, not everything can be considered a clog.
1. A long duration can help the mortgagor in ensuring that they are not compelled to find
another creditor. But if the time – period is found to be oppressive, then it is void.
2. A condition of sale by default is a clog on redemption
3. Restraint on alienation by the mortgagor is a clog on redemption
Collateral Benefit to a Mortgagee
Noakes and Co v. Rice where Rice was the mortgager. He was a covenant stating that Rice
would only sell brews by Noakes and Co. This was a clog on redemption as the mortgagee is
not entitled to any collateral advantage outside the mortgaged contract.
Kreglinger’s rule – unfair and unconscionable and in the nature of a penalty clogging the
equity on redemption.
4. Increasing the time period of possession by mortgagee if the amount wasn’t paid
within the stipulated period
5. Postponement through a subsequent agreement
6. Subsequent Sale
7. Right of Pre-emption (first choice during sale)
8. Stipulation to pay for demolished structures
Exceptions:
1. Can be finished by an agreement to sale
2. Decree of Court
3. Right of Redemption and Interest of Mortgage is vested within the same person
4. Acquired by the government
5. Mortgagee acquires a share in the property, the indivisibility of the mortgage is
broken and he can redeem
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Redemption can occur:

a. By paying money to mortgagee directly
b. By submitting it through court
c. By bringing a suit for redemption

Extinguished:
a. Mortgagor selling right
b. Decree of court

List of Provisions
60 A. Obligation to transfer to third party
Encumberance – prior over subsequent
60 B. Right to inspection and production of documents
At the mortgagor’s cost
61. Right to redeem separately or simultaneously
When one becomes due, can redeem one, some or all
62. Right of usufructuary mortgagor to recover possession
When money has been paid or the time has elapsed
63. Accession to mortgaged property
Mortgagor entitled to any accessions unless contract to contrary.
Accession is any addition to value of the property
Natural Accession – entitled
Accession by Mortgagee – separable from the property - payment to Mortgagee
Accession by Mortgagee – non – separable from property – payment to Mortgagee if
preventing destruction or the assent of the mortgager received
63 A. Improvements to mortgaged property
Entitled to improvement unless necessary to prevent destruction or deterioration, prevent
security from becoming less, order by public servant, liable to pay cost
64. Renewal of mortgaged lease
Entitled to new lease
65. Implied contracts
- Title
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- Defence of Title
- Payment of Public Charges
- Payment of Rents
- Discharge of Prior Encumberance
65 A. Mortgager’s power to lease
Mortgagor has power to lease, make best rent, no covenant for renewal, effect no later than 6
months of the lease, building, no longer than three years.
66. Waste by mortgagor in possession
Mortgagor not entitled if property deteriorates, but not to destructive or permanently injurious
acts
Rights and Liabilities of the Mortgagee
67. Right of Foreclosure
Mortgagee does not automatically become the owner
File a suit for recovery of amount – Limitation Period of 12 years
67 A. Bound to bring suit on several mortgages
68. Right to sue for mortgage – money
1. Mortgagor binds himself to do so
2. If by a cause other than fault of mortgagor/mortgagee, the property is wholly or partially
destroyed
3. Fault of mortgagor – deprivation of property
4. Mortgagor fails to deliver
- Tried all other means
69. Power of sale when valid

Charge
Lease
Marshalling
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