Table of Contents

MORTGAGE DEFINED ..................................................................................................................................... 2

KINDS OF MORTGAGE.................................................................................................................................... 2
SIMPLE MORTGAGE [SECTION 58(B)] ............................................................................................................. 2
MORTGAGE BY CONDITIONAL SALE [SECTION 58(C)]...................................................................................... 3

USUFRUCTUARY MORTGAGE [SECTION 58(D)] ............................................................................................... 4

ENGLISH MORTGAGE [SECTION 58(E)] ........................................................................................................... 6
MORTGAGE BY DEPOSIT OF TITLE DEEDS (EQUITABLE MORTGAGE) [SECTION 58(F)] ...................................... 7
ANOMALOUS MORTGAGE [SECTION 58(G)] ................................................................................................... 8

CONCLUSION ................................................................................................................................................. 9
MORTGAGE DEFINED

Mortgage is defined by Section 58 (a) of the Transfer of Property Act, 1882 (TPA) as a 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 (monetary) liability.
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 (if any) by which the transfer is affected is called a mortgage-deed.

KINDS OF MORTGAGE

Mortgage

Conditional Deposit of
Simple Usufructuary English Anamalous
Sale Title deeds

SIMPLE MORTGAGE [SECTION 58(B)]

Section 58(b) describes a type of mortgage called a simple mortgage. In a simple mortgage,
the mortgagor promises to personally repay the loan without giving possession of the
property to the mortgagee.

The mortgagor also agrees that if they fail to repay, the mortgagee has the right to sell the
property and use the proceeds to pay off the loan.
The key elements of a simple mortgage are:

1. The mortgagor agrees to personally repay the loan.

2. The property is not given to the mortgagee.
3. The mortgagor transfers the right to sell the property if they fail to repay it as security for
the loan.
A critical aspect of a simple mortgage is the mortgagor’s personal obligation to repay the loan.
This obligation can be explicit or implied from the terms of the transaction when the loan is
accepted. However, in certain cases, like a usufructuary mortgage, the terms of the mortgage
transaction may change this obligation

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In a simple mortgage, the mortgagor retains possession of the property. The mortgagee’s
security is solely based on the property itself, not on any income or profits it generates. If a
simple mortgagee seeks to enforce their security, they cannot obtain a possession decree
according to Section 68. Instead, it would convert the simple mortgagee into a mortgagee
with possession.
The mortgagee has the right to sell the property if the mortgagor fails to repay the loan.
However, this power of sale requires court intervention. This means that the mortgagee must
obtain a court decree to execute the sale. Once the property is sold through the court, the
mortgagee receives the advanced money with interest, and the remaining proceeds go to the
mortgagor.
To create a simple mortgage, a registered document is necessary. Even if the loan amount is
less than 100 rupees, Section 59 states that a registered instrument is required for a simple
mortgage.
In case the mortgagor fails to repay the loan on time, the mortgagee has two remedies
available:
1. The mortgagee can sue the mortgagor personally to recover the money owed. This results
in a simple money decree.
2. The mortgagee can also seek a court order to sell the mortgaged property and recover the
money. This leads to a decree for the sale of the property.
However, the mortgagee can combine both actions in a single lawsuit. They can sue the
mortgagor personally and request a court decree for the sale of the property. It’s important
to file the lawsuit within 12 years from the due date of the loan or mortgage money.

In the case of Mathai Mathai v Joseph Mary, a specific property was used as collateral
security for stridhan, with the mortgagor being responsible for paying interest towards the
loan repayment. However, the mortgage deed did not include any provision regarding the
delivery of possession. As a result, the court determined that this particular deed should be
classified as a simple mortgage.

MORTGAGE BY CONDITIONAL SALE [SECTION 58(C)]

Section 58(c) explains the concept of a mortgage by conditional sale. In this type of mortgage,
the mortgagor appears to sell the property to the mortgagee, but there is a condition
attached to the sale. If the mortgage money is not repaid by a certain date, the sale becomes
absolute, or if the payment is made, the sale becomes void, or the buyer transfers the
property back to the seller. This condition must be stated in the same document that affects
the sale.
Muslims developed the mortgage by conditional sale as a way to comply with their religious
prohibition on charging interest on loans. This type of mortgage allowed them to receive the
principal amount and interest while keeping their conscience clear.

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The basic elements of a mortgage by conditional sale are:
• The mortgagor ostensibly sells the property to the mortgagee.
• There is a condition attached to the sale, specifying the consequences based on
repayment or default.
• The condition must be included in the same document.
It’s important to note that a transaction will not be considered a mortgage if the condition is
not mentioned in the document affecting the sale.
The inclusion of the proviso under clause (c) of Section 58 brought about a significant change.
It stated that a transaction would be deemed a mortgage by conditional sale only if the
condition is embodied in the document that affects or purports to affect the sale. This
amendment emphasized that the provision of repurchase must be included in the original
sale deed itself rather than having separate documents for the sale and conditions of
reconveyance.
The parties’ intention is crucial in determining the nature of the transaction. If the written
words of the deed contradict one’s claim, evidence needs to be produced before the court to
establish the intention of the parties.
In a mortgage by conditional sale, the mortgagor has no personal liability to repay the debt,
and the mortgagee cannot include the mortgagor’s other properties in this transaction. This
type of mortgage is an exception to the general rule of “No Debt, No Mortgage.”
Upon breach of the condition, the sale deed itself is executed, and the transaction becomes
an absolute sale without further accountability between the parties. The mortgagee does not
possess the property but has qualified ownership that may become absolute in case of
default.

The remedy available to the mortgagee is foreclosure, which can only be obtained through a
court decree. The mortgagee can file a decree for foreclosure when the mortgagor fails to
repay the amount on time, and the sale becomes absolute.
In the case of Tamboli Ramanlal Moti Lal v Gharchi Chimanlal Keshavlal, the court
emphasized that for a mortgage to be classified as a mortgage by conditional sale, the
existence of the debt must be inferred from the conditions explicitly mentioned in the
mortgage deed. The conditions should clearly indicate an absolute ostensible sale in the event
of default in payment, as well as the return of the property upon payment prior to or on the
prescribed date. If the mortgage deed does not reflect a debtor-creditor relationship or lacks
these essential conditions, it cannot be considered a mortgage by conditional sale.

USUFRUCTUARY MORTGAGE [SECTION 58(D)]

Section 58(d) explains the concept of a usufructuary mortgage. In a usufructuary mortgage,

the mortgagor either delivers possession of the property to the mortgagee or binds
themselves to deliver possession.

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The mortgagee is authorized to retain possession until the mortgage money is paid and to
receive the rent and profits from the property. The mortgagee can use these rents and profits
in place of interest or payment of the mortgage money, either fully or partially.
The basic elements of a usufructuary mortgage are:
• The mortgagor delivers possession of the property to the mortgagee or binds
themselves to do so.
• The mortgagee is authorized to retain possession and receive the rent and profits
from the property.
• The mortgagee can use the rent and profits as a substitute for interest or payment of
the mortgage money, either fully or partially.
Delivery of Possession
The mortgagor provides possession of the property to the mortgagee as security for the
mortgage money. The mortgagee retains ownership of the property until the debt is paid. The
actual delivery of possession may not occur at the time of executing the mortgage deed but
can be agreed upon through an express or implied undertaking by the mortgagor.

Rent and Profits

The mortgagee is entitled to receive the rents and profits generated by the mortgaged
property until the mortgage money is repaid. The manner in which the rents and profits are
appropriated depends on the terms of the mortgage deed. The mortgagee can use the rents
and profits in lieu of interest, principal, or both. The specific terms dictate when the
mortgagor can regain possession.
No Personal Liability of the Mortgagor
In a usufructuary mortgage, the mortgagor is not personally responsible for repaying the
mortgage money. The mortgagee must utilize the rents and profits from the property to
satisfy the mortgage money. The duration of the mortgage is not limited since it is difficult to
predict when the debt will be fully repaid.
Mortgagee’s Remedies
If the mortgagor fails to deliver possession of the property, the mortgagee can sue for
possession or to recover the advanced money. However, if the mortgagee has already been
given possession, their only remedy is to retain the property until the debts are satisfied. The
usufructuary mortgagee does not have the right of foreclosure or sale. The mortgagee has
the advantage of repaying themselves using the rents and profits.
Rights of Usufructuary Mortgagor
Under Section 62, a usufructuary mortgagor has the right to recover possession of the
property from the mortgagee in certain cases. These cases include when the mortgagee was
authorized to pay themselves the mortgage money from the rents and profits, and the
mortgage money is paid, or when the terms for payment of the mortgage money have
expired. The mortgagor pays the money to the mortgagee or deposits it in court.
In the case of Prabhakaran v M Azhagiri Pillai, the mortgagor transferred the interest in his
property to the mortgagee, granting the mortgagee the authority to retain possession and

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enjoy the rents and profits until the debt is fully realized. The court ruled that in a usufructuary
mortgage, the mortgagor bears no personal liability beyond this arrangement.

ENGLISH MORTGAGE [SECTION 58(E)]

Clause (e) of Section 58 describes an English mortgage. In an English mortgage, the mortgagor
agrees to repay the mortgage money on a specific date and transfers the property to the
mortgagee. However, there is a provision that the mortgagee will re-transfer the property to
the mortgagor upon full payment of the mortgage money as agreed.
The basic elements of an English mortgage are:
• The mortgagor commits to repaying the mortgage money on a certain date.
• There is an absolute transfer of the property to the mortgagee.
• The transfer is subject to the condition that the mortgagee will re-transfer the
property to the mortgagor upon full payment of the mortgage money on the agreed
date.
In an English mortgage, the mortgagor transfers full ownership of the property to the
mortgagee as security. The mortgagee will return or re-transfer the property to the mortgagor
once the agreed-upon mortgage money is fully repaid.
Personal Liability
In an English mortgage, the mortgagor is personally liable to repay the mortgage debt by the
agreed-upon date. The agreement to repay is a crucial aspect of this type of mortgage.
Remedy Available
If the mortgagor defaults on payment, the mortgagee can sell the mortgaged property to
recover the debt.
No Absolute Interest
While the property is transferred absolutely to the mortgagee, it is subject to the provision of
re-transfer if the mortgagor repays the mortgage money. Therefore, the mortgagee has an
interest in the property but with the right of redemption.
In an English mortgage, when the mortgagor transfers the property to the mortgagee, two
circumstances may arise:
Mortgagor repays the amount: If the mortgagor repays the agreed-upon amount to the
mortgagee on the specified date, the property that was transferred absolutely will be
reconveyed to the mortgagor.
Mortgagor defaults on payment: If the mortgagor fails to repay the amount on the specified
date, the mortgagee has the right to sell the property and recover the debt. However, the
mortgagor is personally liable for repaying the debt.
Rights of the Mortgagee
In an English mortgage, the mortgagee has the right to possession, even if the right of entry
is not explicitly stated. The mortgagee can retain possession until the full amount is repaid. If
the mortgagee is in possession and receiving profits from the property, those profits will be
used to reduce the mortgagee’s dues.

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For example, if B, the mortgagor, sells the property to A through a sale deed, and B defaults
on payment, A only needs to register the sale deed as they have been given absolute rights
over the property.

MORTGAGE BY DEPOSIT OF TITLE DEEDS (EQUITABLE MORTGAGE) [SECTION

58(F)]

Section 58(f) describes a mortgage by the deposit of title deeds. In this type of mortgage, a
person in specific towns, such as Calcutta, Madras, and Bombay, or in any other town
specified by the State Government, delivers documents of title to immovable property to a
creditor or their agent with the intention of creating a security on the property.
In English Law, this type of mortgage is referred to as an “equitable mortgage” as it involves
the deposit of title deeds without additional formalities or a written document.
This type of mortgage provides flexibility to the business community when there is an urgent
need to raise funds before the opportunity to prepare a mortgage deed arises. This mortgage
does not require a written document and is not affected by registration laws since it is an oral
transaction.
The basic elements of a mortgage by the deposit of title deeds are:
• Existence of a debt.
• Deposit or delivery of the title deeds.
• The intention that the deeds will serve as security for the debt.
Territorial Restrictions
It’s important to note that this type of mortgage can only be made in specific areas designated
by the State Government and not everywhere in India. The restriction applies to the location
where the deeds are delivered, not the situation of the property being mortgaged. Depositing
the deeds beyond the specified area will not create a mortgage or a valid security.
Existence of Debt
The debt can be an existing one or a future obligation. The transfer of an interest in any
property to secure the payment of money, either advanced or to be advanced, or to fulfil an
existing or future debt, or to perform any obligation resulting in a pecuniary obligation is
considered a mortgage. Clause (f) provides one way of creating a mortgage, which is the
equitable mortgage by the deposit of title deeds.
Deposit of Title-Deeds
Physical delivery of the documents is not necessary; constructive delivery is sufficient. A valid
equitable mortgage does not require all the title documents to be deposited, but the
deposited deeds should be genuine, relevant to the property, and serve as material evidence
of title. Suppose a title deed is not included in the deposited documents and there are other
documents that establish the person’s title to the property, but they are not deposited. In
that case, an equitable mortgage is not created.
Intention to Create Security

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The essence of the transaction lies in the intention that the title deeds will serve as security
for the borrowed money (debt). Simply handing over the title deeds from one person to
another does not create a mortgage. The delivery of the deeds must fulfil the agreement that
they will serve as security for the debt.
The intention to create security is factual, determined on a case-by-case basis through
presumptions and evidence, whether oral, documentary, or circumstantial. It is a question of
fact, not a question of law.
In the case of United Bank Of India v Messra Lekharam Sonam and Co, the court established
that the submission of the title deed relating to the property is the essential requirement for
it to be considered as security. No further requirements or formalities are necessary to create
a valid mortgage. This ruling emphasizes the importance of the title deed as the primary
element in establishing the security for a mortgage.
It is worth noting that each case’s specific facts and circumstances can influence the court’s
decision. However, this case clarifies that the submission of the title deed alone is sufficient
to create a valid mortgage without any other additional requirements or formalities.

ANOMALOUS MORTGAGE [SECTION 58(G)]

Clause (g) of Section 58 defines an anomalous mortgage as a mortgage that does not fall into
the categories of a simple mortgage, a mortgage by conditional sale, a usufructuary mortgage,
an English mortgage, or a mortgage by deposit of title deeds.
The purpose of including clause (g) was to recognize and protect various customary
mortgages that exist in different regions of the country. An anomalous mortgage is essentially
a combination of two or more types of mortgages.
The rights and liabilities of the parties involved in an anomalous mortgage are determined by
their contractual agreement as stated in the mortgage deed. Additionally, local usage and
customs may also influence the rights and liabilities to the extent that the contract does not
cover them.
An anomalous mortgage is created through an agreement between the mortgagor and the
mortgagee based on their terms and conditions. It is termed “anomalous” because it does not
fit into the established categories such as simple, usufructuary, mortgage by conditional sale,
and so on.
For example, an anomalous mortgage could involve a combination of a usufructuary
mortgage and a mortgage by conditional sale. In this case, the mortgagee is given possession
of the property for a specific period with a condition that if the debt is not repaid, the
mortgage will be treated as a mortgage by conditional sale. This creates a situation where the
mortgage is both usufructuary and by conditional sale, making it an anomalous mortgage.
The remedy available in an anomalous mortgage depends on the terms of the mortgage
agreement. If the agreement allows for it, the mortgagee has the right of both “foreclosure”
and “sale.” If the debt is not repaid, the mortgagee can become the property owner through
foreclosure or sale, as specified in the agreement.

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In the case of Hathika v Puthiya Purayil Padmanathan, the mortgagor borrowed a specific
amount from the mortgagee and also handed over the property as security. According to the
terms of the agreement, the mortgage amount was supposed to be repaid within a period of
6 months. In the event of non-payment, the mortgagee had the right to sell the property and
recover the amount. Although the document described it as a usufructuary mortgage, the
court classified it as anomalous. The court reasoned that the mortgage exhibited
characteristics of both a simple mortgage and a usufructuary mortgage.

CONCLUSION
In conclusion, the concept of mortgage plays a vital role in the legal framework of property
transacbons, parbcularly under the Transfer of Property Act, 1882. It serves as a significant
financial tool by which property owners can secure loans while providing assurance to lenders
through the transfer of an interest in immovable property. The Act clearly categorizes different
types of mortgages—such as simple mortgage, mortgage by condiXonal sale, usufructuary
mortgage, English mortgage, mortgage by deposit of Xtle deeds, and anomalous
mortgage—each with its disbnct features, rights, and legal implicabons.

Understanding these types is essenbal not only for legal professionals but also for individuals
engaged in real estate and financial dealings. A well-structured mortgage agreement protects
the interests of both borrower and lender, promotes responsible lending, and supports the
overall economic system by facilitabng access to credit. As real estate and property markets
evolve, knowledge of mortgage types remains crucial to ensuring transparent and lawful
property transfers.