TPA 2022 Chapter IV

CHAPTER 4 - (SEC. 58-104)

Of Mortgages of Immovable Property and Charge
Difference between Mortgage, Hypothecation and Pledge?
Pledge - Pledge means bailment of goods as security against the loan.
Hypothecation - Creation of charge on movable property without delivering them to the lender.
Mortgage - It is transfer of an interest in specific immovable property as security against loan.

Section 58: “Mortgage”, “mortgagor”, “mortgagee”, “mortgage-money” and

“mortgage-deed” defined
What is a Mortgage?
A mortgage is the transfer of an interest, in a specific immovable property for the
purpose of securing:

 The timely payment of the money advanced or to be advanced by way of loan, or

 An existing or future debt, or
 The performance of an engagement which may give rise to a pecuniary liability.

Mortgagor: The person who transfers the interest in an immovable property.

Mortgagee: The person to whom this interest it transferred.
Section 59A - mortgagors and mortgagees shall be deemed to include references to persons
deriving title from them respectively
Ex. Heirs, Executors, Administrators etc.

Mortgage Money – Principal money and interest of which the payment is secured.
Mortgage Deed – The instrument (if any) by which the transfer is effected in a mortgage,
the court will look into the deed to identify the intentions of the parties.

Minor cannot be Mortgagor or Mortgagee

Mathai Mathai V. Joseph Mary (2014) (Reaffirmed Mohori Bibee v. Dharmodas Ghose (1903))
Appellant’s mother had paid Rs. 7000 to his uncle, which was her Stridhan paid to her upon marriage.
For this amount, the uncle had mortgaged certain piece of land as security to his mother.
At the time of execution of the mortgage, mother of the Appellant was just 15 years of old, i.e., a
minor and incompetent to contract
Court decided that the mortgage deed formed was actually void ab initio and that the Appellant
cannot claim any relief.
“A deed of mortgage is a contract and we cannot hold that a mortgage in the name of a minor is
valid, simply because it is in the interests of the minor unless she is represented by her natural
guardian or guardian appointed by the court. The law cannot be read differently for a minor who is a
mortgagor and a minor who is a mortgagee as there are rights and liabilities in respect of the
immovable property would flow out of such a contract on both of them.”

YG LAW 1
TPA 2022 Chapter IV

Simple Mortgage - Section 58(b)

Does not involve the delivery or transfer of possession of the property, Property remains
with the mortgagor
The mortgagor expressly or impliedly gives the mortgagee power to sell the immovable
property that is pledged as security in case of non-payment
o Though the mortgagee has the power to sell the immovable property he cannot
do so without the intervention of the court.
A simple mortgage has to be always made only through a registered instrument -
Section 59

Mortgage By Conditional Sale - Section 58(c)

Concept of Ostensible Sale: The seller agrees to sell his property on a certain sum of money
but both the buyer and the seller have the knowledge that the seller is apparently taking a
loan from the buyer.
How it works: X Mortgages his property to Y by Ostensible sale.
- If X defaults on a certain date the sale shall become absolute.
- If X makes the payment on time the sale shall become void and Y will transfer the
property back to X.

Conditional Sale (with right to repurchase) V. Mortgage by Conditional Sale

Court will decide by analysing the intention of the parties from the document of transfer.
The most important determinant is the existence of a debt, if there is a Debtor-Creditor
relationship between Seller and buyer which can be inferred from the transfer document
then it is a Mortgage by Conditional Sale.
Every conditional sale which is accompanied by agreement for reconveyance will not be
assumed to be mortgage by conditional sale.
Proviso to 58(c): The transfer is a mortgage by Conditional Sale should be specifically
mentioned in the document which effects or purports to effect the Mortgage.
Deep Doubt: When two documents are there and one talks about sale but the other talks about
Reconveyance, can they both be read together as one to infer application of Section 58(c)?

Usufructuary Mortgage - Section 58(d)

Usufruct - The right to enjoy the use and advantages of another's property short of the
destruction or waste of its substance.
The mortgagor delivers the possession and right to enjoy an income (rent and profits) of and from
the property to the mortgagee until the payment of the mortgaged money is completed. If the
mortgagor is not in a position to give immediate possession, it is sufficient if he gives the right to
possession.
- The income from the property can be in lieu of interest or the principal amount or part of it.
- If debt is in lieu of the income of the property and from the income of the property, the debt is
paid, the mortgagor can recover possession of the property (Section 62)
No personal Liability of Mortgagor – He can recover property after payment but cannot be
compelled to do so by Mortgagee which means there is no time limit for this mortgage.
No right to Foreclosure or Sale of Mortgagee – Only right to retain possession until the debt is paid,
in case he loses the possession then he can get a decree for getting back possession.

YG LAW 2
TPA 2022 Chapter IV

English Mortgage - Section 58(e)

The mortgagor absolutely transfers the property to mortgagee and binds himself to repay
the mortgaged money on a certain date with one condition that on the payment of
mortgaged money, mortgagee shall re-transfer the property back to mortgagor.
After the mortgagee receives payment for the mortgage debt, the mortgagee will transfer
the immovable property back to the mortgagor.
Here the word ‘absolutely’ is only a matter of form and not of substance.
Because even if the mortgagor doesn’t pay the debt back, the mortgagor still cant
sell the property until he gets a decree of sale from the court for that property.

Ram Kinkar v. Satya Charan (1939)

”Their Lordships think that the sub-section (e) upon its true construction does not
declare an English Mortgage to be an absolute transfer of property. It declares only
that such a mortgage would be absolute were it not for the proviso to re-transfer”

Mortgage by Deposit of Title Deeds (Equitable Mortgage) - Section 58(f)

In the towns of Calcutta, Madras or Bombay or as any State Government specifies (by
notification in Gazette) in this behalf, Mortgagor delivers the title documents of his
immovable property to a creditor with an intent to create a security, the transaction is
known as Mortgage by Deposit of Title Deeds.
Always optional to use Registered Instrument in this type of mortgage – Section 59

Anomalous Mortgage - Section 58(g)

Such a mortgage which is not prescribed in the above-mentioned kinds, shall fall under the
category of Anomalous Mortgage. It can be a combination of two or more mortgages.
Section 98. Rights and liabilities of parties to anomalous mortgages shall be determined by
their contract as evidenced in the mortgage-deed, and, so far as such contract does not
extend, by local usage.
So, the main reason Anomalous is mentioned is to cover mortgages governed by
local customs.
Examples: Kanom and Otti Mortgages of Madras
Otti and Kanom mortgages cannot be redeemed before the expiry of 12
years (unless there is agreement to Contrary)
 Kanom mortgage also acts like a lease in addition to a mortgage
 Otti Holder has a right of pre-emption (The right of pre-emption gives
its holder preference in buying a particular property should the owner wish
to sell it to a 3rd party)

.
Simple - Conditional – Usufructuary – English – Deposit - Anomalous

YG LAW 3
 TPA 2022 Chapter IV

Section 59: Mortgage when to be by assurance (Registration rules)

Simple Mortgage – Always with Registered Instrument.
Mortgage by deposit of Title deeds – Optional to use Registered Instrument.

Principal money secured is more than Rs.100 - Only by Registered Instrument signed by
mortgagor and attested by at least 2 witnesses
Principal money secured is less than Rs.100 – May be effected by delivery of the Possession.

Section 59A. Mortgagors and mortgagees to include persons deriving title from them.
Unless otherwise expressly provided, references in this Chapter to mortgagors and
mortgagees shall be deemed to include references to persons deriving title from them
respectively

Note: These Notes are made to compliment the video provided in the ‘Transfer of Property –
Judiciary Course’ on YG Law App, you may miss out on important information for Judiciary Exams
which is disclosed only in the video given with these notes, to get the most out of these notes, do
refer the video provided.

Be part of YG Law Community and make studying law easier.

YouTube: YG Law; Instagram: YGLaw.in

Facebook: YGLaw.in; Twitter: YGLaw_in

Click here to view my courses

YG LAW 4
soprotection.com
TPA Don’t skip the video of this topic Chapter IV

RIGHTS AND LIABILITIES OF MORTGAGOR

RIGHTS
1. Right of Redemption (Section 60)
2. Right of transfer to a 3rd party (60A)
3. Right to inspection and production of documents (Section 60B)
4. Right of Accession and Improvements (Section 63 and 63A)
5. Right to Renewed Lease (Section 64)
6. Right to grant a lease (Section 65A)
7. Right to reasonable waste (Section 66)
LIABILITIES
1. Duty to Indemnify for defective title
2. Duty to pay public charges
3. Duty to direct rent of a lease to mortgagee
4. Duty to compensate prior mortgagee
5. Duty to avoid waste (Section 66)

Section 60: Right of Redemption of Mortgagor (DOCTRINE OF REDEMPTION)

Right to Redemption: The right of mortgagor to get back the Possession of the property, the
mortgage deed and all documents related to mortgaged property back from the mortgagee
After the principal amount has become due and the mortgagor has paid the money
at a proper place and time, he will acquire the Right to Redemption

Suit of Redemption: The suit filed by Mortgagor to exercise his Right of Redemption.
Partial Redemption - A person interested in a share only of the mortgaged property tries to
redeem his own share by payment of a proportionate part of the amount remaining due on
the mortgage.
Is Partial redemption allowed: Mortgage Debt is not Divisible, it has to be Redeemed in its
entirety so this is not allowed

Clog/Fetter on Redemption: Anything obstructing the right of the mortgagor to redeem.

‘Once a mortgage always a mortgage’

Right to redemption is an indefeasible right which cannot be absolutely taken away from him.

Stanley v Wilde (1899)

The security given by Mortgagor is redeemable by the transferor when he pays back
the loan or discharges his obligation. If any act is done, or any provision is there
which obstructs the right of redemption on payment of the debt or performance of
the obligation, then it acts as a fetter or clog on the equity of redemption and will be
held as void.

YG LAW 1
TPA Don’t skip the video of this topic Chapter IV

INSTANCES WHEN THE CONDITION WILL BE CONSIDERED A CLOG

Excluding the Right of Redemption in the mortgage deed: Right to Redemption is a statutory
right and any provision in the mortgage deed which is extinguishing, preventing or
hampering the right to redeem shall be considered Void.
Postponement in redemption by subsequent agreement of parties: The agreement should
not be part of the same transaction which is creating the mortgage.
If the Mortgaged Property is made security for further advances by mortgagee, generally not
a clog, depends on the facts of the case
Unreasonable Postponement of Right to Redemption: Generally, not a clog, there can be a
reasonable postponement as there is in some types of anomalous Mortgages, so whether it
is an unreasonable postponement or not depends upon the court’s opinion.
Unreasonable postponement of Right to redemption if default is made on payment by
mortgagor after the term of mortgage ends is also a clog on redemption.

Transfer of ownership to Mortgagee: A condition that after a fixed period of time if the debt
is not paid then the ownership of the property shall be transferred to Mortgagee is a clog.
Conditional Sale of property: Sale of property by the mortgagee on failure of repayment by
the mortgagor is a clog.
Right of pre emption is given to mortgagee: 2 situations
i. Mortgagor is just given the right of pre emption - Not a clog
ii. Mortgagor has right of pre emption with an option to purchase - Clog
Restraint on Alienation: A condition that the property shall not be alienated by the
mortgagor even for the purpose of paying off the debt is a clog.

Collateral Benefit to Mortgagee outside the Mortgage Contract:

Noakes & Co. v. Rice (1902) – Collateral benefit for the term of mortgage even after repayment
Rice mortgaged his premises and goodwill to Noake with a condition that if Rice
paid the debt, Noakes would reconvey the property back to Rice but during the
continuance of the term of mortgage, whether or not any money be due on
security, Rice would not use or sell upon the premises any malt Liquors not
exclusively obtained from Noakes.
This was held as a clog on redemption for the following reasons:
1. Mortgage cannot be made irredeemable, any stipulation is not allowed
which prevents the mortgagor to get back the property after payment.
2. Conditions can be put but the mortgagee shall not reserve any
collateral advantage outside the mortgage contract.
Kreglinger v. New Patagonia Meat & Cold storage Co. Ltd (1914)
The mortgagee loaned money to the mortgagor meat company by way of a floating
charge over the company’s assets. One of the terms was that that for 5 years the
mortgagor shall not sell sheep skins to any person other than the mortgagee as long
as the mortgagee is paying best price for the skins.
Court held that this is not a clog on redemption, it is just a collateral which is
mentioned in the terms of mortgage and is not against public policy.

EXTINGUISHMENT OF MORTGAGORS RIGHT TO REDEMPTION:

1. Act of Parties
2. By Decree of Court
Decree for foreclosure in favour of Mortgagee

YG LAW 2
TPA Don’t skip the video of this topic Chapter IV

Section 60A - Obligation to transfer to third party instead of re-transference to mortgagor

If the mortgagor is entitled to redemption, he is empowered to ask the mortgagee to assign
his mortgage debt and transfer the mortgaged property to a third party instead of him.
The right under this section can also be exercised by a subsequent encumbrancer and the
right of subsequent encumbrancer shall be preferred over the mortgagor.
Illustration: A mortgages a property to B and then mortgages the same property to C.
A – Mortgagor
B – Prior mortgagee
C – Subsequent encumbrancer
Whatever right A has under 60A, same rights C also has. Now here C can also ask B to
transfer the property to 3rd person under 60A and C’s right would precede A’s right.

Right to Requisition shall be stronger of Prior mortgagee than Subsequent encumbrancer.

Section 60B: Right to Inspection and Production of Documents

As long as the right to redemption subsists, the mortgagor may ask the mortgagee to
produce the title documents in his custody and inspect it and can even make copies of the
documents or part of documents.

Section 61: Right of the Mortgagor to Redeem Properties Separately or Simultaneously

(DOCTRINE OF CONSOLIDATION made Optional for Mortgagor)
Doctrine of Consolidation: Applies where a borrower has mortgaged separate properties to
secure separate debts owed to the same lender. Where a borrower has defaulted on one of
those debts, the doctrine of consolidation allows the lender to pool the assets secured by
the borrower and to realise those secured assets against the aggregate sum owing.
Under 61 the mortgagor is entitled to redeem any one such mortgage separately, or any
two or more of such mortgages together.
So, Doctrine of Consolidation shall not apply unless there is a contract that it shall apply.

Section 62: Right of usufructuary mortgagor to recover possession

Usufructuary mortgagor can redeem when:
1. Mortgagor is authorised to pay the mortgage money to himself from the rents and
profits of the property and the total amount due is paid.
2. Term of the mortgage is expired and mortgagor pays the balance amount remaining
or tenders it in the court.

YG LAW 3
TPA Don’t skip the video of this topic Chapter IV

Section 63: Accession to mortgaged Property

Accession means Addition or increase in the property. If a mortgaged property is in
possession of the mortgagee and during the continuation of this possession any accession
happen in the form of land, such as increase in the land naturally or artificially, it will be
called Accession.
Accession is of the following types:
Natural Accession: In which the parties had no control over the Accession
Acquired Accession: Made by mortgagee during mortgage
Separable Acquired Accession: Temporary and can be removed (Mortgagor not
entitled to this without paying for it)
Inseparable Acquired Accession: Permanent and Cannot be removed (Mortgagor is
entitled to this but he may be liable to pay)

After exercising his right to redemption mortgagor shall be entitled to the accession but he
will pay the mortgagee the necessary expenses + interest (9% per annum - default rate)
Necessary Expenses: Mortgagor will pay when the Accession is necessary was done for
preservation of the property (for preventing destruction, Sale or forfeiture of the property

Section 63A: Improvements to mortgaged property

During the Mortgage Term: The mortgagor, upon redemption shall Not be liable to pay the
cost of improvements made during the term of mortgage.
Necessary expenses on improvements are liable to be paid
Where any such improvement was:
1 necessary to preserve the property from destruction or deterioration
2 necessary to prevent the security from becoming insufficient, or
3 made in compliance with the lawful order of any public servant or public
authority
IN BOTH 63 AND 63A
 Mortgagee is entitled to the necessary expenses + interest (9% is the default rate)
 In case of Usufructuary mortgage the mortgagor will have the right to settle the debt
with the rents and profits accruing from the Accession or improvements
 Application of the sections can be excluded or curtailed by a contract to the contrary.

Section 64: Renewal of Mortgaged Lease

If the mortgaged property is a lease and the mortgagee obtains a renewal of the lease, the
mortgagor on redemption will have the benefit of the new lease
This section will not apply in case of contract to the contrary.

YG LAW 4
TPA Don’t skip the video of this topic Chapter IV

Section 65: Implied Contracts by mortgagor

The following shall be implied contracts (Duties) on behalf of the mortgagor.
o He has the power to transfer the interest which he is mortgaging and will defend
every contrary circumstance bearing all the expenses.
o He will pay all public charges accruing due in respect of the property.
o He will pay the rent timely when the property he has mortgaged is a lease
o He will discharge debt of prior mortgagee

Section 65A. Mortgagor’s power to lease

Mortgagor can lease the mortgaged property and mortgagee shall be bound by it when:
 The lease is in ordinary course of management; and
 It is in accordance to the law and customs/usage
The lease should be at the best possible rate,
 with no premium,
 with no part of rent in advance,
 with no covenant for renewal of lease
Lease should take effect within 6 months and cannot be for more than 3 years in duration.
This section will not apply in case of contract to the contrary.

Section 66. Waste by mortgagor in possession

Mortgagor is not liable to the mortgagee for allowing the property to deteriorate; but he
must not commit any act which is destructive or permanently injurious that it makes the
property insufficient as security
Insufficient: A security is insufficient when the value of the mortgaged property does not
exceeds by one-third, or, if consisting of buildings, does not exceeds by one-half, the amount
for the time being due on the mortgage.

YG LAW 5
TPA Don’t skip the video of this topic Chapter IV

RIGHTS AND LIABILITIES OF THE MORTGAGEE

RIGHTS
1. Right to Foreclosure or Sale (Section 67)
2. Right to sue for mortgage money (Section 68)
3. Right to Sell (Section 69)
4. Right to Appoint a receiver (Section 69A)
5. Right to Accession (Section 70)
6. Right to renewal of Lease (Section 71)
7. Right to spend money (Section 72)
8. Right to proceeds of revenue sale or compensation on acquisition (Section 73)
9. Rights of Mesne Profits (Section 94)
DUTIES
1. Bound to bring one suit on several mortgages (Section 67A)
2. Liabilities of mortgagee in possession (Section 76-77)

Section 67: Right to Foreclosure (DOCTRINE OF FORECLOSURE)

Foreclosure: Action of taking possession of a mortgaged property when the mortgagor fails
to keep up their mortgage payments.
Redemption and foreclosure are co extensive: When right to redemption accrues after that
only the mortgagee gets the right to enforce his security.
Mortgagee can ask the court to pass a decree of foreclosure when
 the mortgage money is due and the mortgagor has not paid the due amount; and
 any decree of redemption has not been passed by the court under section 60 of TPA.
After the Decree of foreclosure is passed the Mortgagor is debarred from getting a decree
of redemption or sale of property

Partial Foreclosure or Sale- If a property has been mortgaged to several mortgagees, then
any one mortgagee cannot file a suit of foreclosure or sale against the mortgagor until and
unless the mortgagees have, with the consent of the mortgagor, severed their interests
under the mortgage. All the co-mortgagees must join together and file one suit.
Right to Foreclosure is not an absolute right, it can be excluded via contract

YG LAW 6
TPA Don’t skip the video of this topic Chapter IV

When a mortgagee can avail his right to foreclosure, Sale or neither of these

Types of mortgages Right To Foreclosure Right To Sale

1. Simple Mortgage. No Yes

2. Mortgage by Conditional sale Yes No
3. Usufructuary Mortgage Not Permitted
4. English Mortgage. No Yes
5. Mortgage by Deposit of Title Deeds No Yes
6. Anomalous mortgage Subjected to the terms and conditions of the contract.

7. Mortgagor is trustee of Mortgagee No Yes

8. If a Public Utility has been Mortgaged Not Permitted

for public works.

Section 67A: Mortgagee when bound to bring one suit on several mortgages.
(DOCTRINE OF CONSOLIDATION made Mandatory for Mortgagee)

When a mortgagee holds two or more mortgages executed by the same mortgagor and he
has a right to obtain the same decree (section 67) on each of the mortgages, then he has to
sue for all the mortgages together.
In the absence of a contract to the contrary

Section 68: Right to Sue for mortgage money.

Right to sue for the mortgage money available in these 4 cases and no others:
1. Personal Covenant: When the mortgagor binds himself personally to repay
A transferee from the mortgagor or from his legal representative shall not be
liable to be sued for, the mortgage-money
2. Destruction of Security: When the mortgaged property is wholly/partially
destroyed or the security is rendered insufficient (Section 66)
It should be not by the wrongful act of Mortgagee.
The mortgagee has to give the mortgagor a reasonable opportunity of providing
further security enough to render the whole security sufficient.
3. Wrongful act or default by Mortgagor: When 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;
4. Failure to deliver possession by Mortgagor: When Mortgagee is entitled to the
possession of the property and the mortgagor fails to deliver the possession
While securing the possession there should not be any disturbance by the
mortgagor or any person claiming under a title superior to that of the mortgagor

YG LAW 7
TPA Don’t skip the video of this topic Chapter IV

Section 69: Right to Sell (Ultimate Exceptions)

67 and 68 require the mortgagee to get a decree from court to foreclose or sale.
69 empowers the mortgagee to just simply sell the property or any part of it without
intervention of court, but he can do it in only in the following circumstances
1. Under English Mortgage, but the mortgagor and mortgagee should not be a
Hindu, Muslim or Buddhist, or any other community excluded by State
Government through notification in Gazette
2. Power of sale without intervention of court is conferred to the mortgagee in the
mortgage deed and:
a. Mortgagee is the Government
b. Mortgaged property is situated in Calcutta, Madras or Bombay and any other
parts which the State government adds through notification in Gazette
Conditions to exercise the power given under this section:
 3 months’ notice should be given to mortgagor
 The money due should be
 due from the side of mortgagor for 3 months.
 Higher than Rs.500.

Sale done – Money Received

Now what to do with the money, order of priority given below:
o Prior Encumbrances shall be discharged
o Payment of costs, charges and expenses of property incurred on sale
o Mortgage debt of mortgagee is discharged
o Surplus money will be given to the person who is entitled to the mortgaged
property (Interest will be charged on mortgagee if the surplus money is not paid timely by him)

Protection for Purchaser: Not following these conditions will not hamper the interest of
purchaser in good faith without notice.

Remedy for Mortgagor: He can sue mortgagee for damages if he misused his power.

Section 69A: Appointment of Receiver

For the proceeds of Sale (Under 69), Mortgagee can appoint a receiver.
Receiver can be appointed by the following methods:
Receiver named in mortgage deed: should be named in the mortgage deed and
should be willing and able to act as a receiver
With consent of Mortgagor: If can’t appoint the person named in mortgage deed
By court: If mortgagor doesn’t consent then Court can also appoint a receiver
Receiver can be removed by consensus of mortgagee & mortgagor or by order of court

Receiver is agent of Mortgagor and the mortgagor will be responsible for the receivers acts
and defaults except when:
 Mortgage deed makes someone else responsible
 Acts or Defaults of the receiver are due to the improper intervention of the
mortgagee

YG LAW 8
TPA Don’t skip the video of this topic Chapter IV

Powers of Receiver:
- To demand and recover all the income of which he is appointed receiver for and
provide receipts for the same.
- To take out his commission as decided (Max 5%, if not decided then also 5%)
A person paying money to the receiver shall not be concerned to inquire if the appointment
of the receiver was valid or not.

Duty of Receiver: To insure the property (if property is insurable) on direction of mortgagee
Application of Money by receiver: As per Section 69

Section 70: Accession to Mortgaged Property - Right to Accession

We learned that right to Accession if of Mortgagor but for the purposes of security of his
mortgage debt the right on Accessions is of Mortgagee

Section 71: Renewal of Mortgaged Lease - Right to Renewed Lease

When the mortgaged property is a lease, Same principle as Section 70 will apply, The
mortgagee for the purposes of the security will be entitled to the new lease.

Section 72: Rights of mortgagee in possession

The following amount spent by mortgagee will be added in costs in the principal amount of
mortgagor (with 9% interest – default rate)
o For the preservation of the mortgaged property from destruction, forfeiture or sale;
o For supporting the mortgagor's title to the property;
o For making his own title thereto good against the mortgagor; and
o for the renewal of the lease;
o Insuring the property where it is of insurable nature
Note: Application of 70-71-72 can be excluded with a contract to the contrary

Section 73: Right to proceeds of revenue sale or compensation on acquisition

(DOCTRINE OF SUBSTITUTED SECURITY)
If mortgaged property or any part or any interest of it is sold/acquired owing to failure
- To pay arrears of revenue or
- other charges of a public nature or
- rent due in respect of such property,
In case of Sale the mortgagee shall be entitled to claim payment of the mortgage-money,
out of any surplus of the sale-proceeds remaining after payment of the arrears and of all
charges and deductions directed by law
In case of Acquisition under any provision of any law he can claim compensation for the
amount of mortgage money.
Note: Such sale/acquisition should not arise from any default of the mortgagee
This right exists even when the principal money has not become due

YG LAW 9
TPA Don’t skip the video of this topic Chapter IV

Section 76: Liabilities of Mortgagee in possession

a. Take Due care of the property mortgaged as he would have of his own property
b. To collect the rent and profits arising from the property
c. Duty not to commit any destructive act
d. Duty to keep all the documents and records properly
e. Maintain proper Receipts and accounts of money received and spent by him as mortgagee
f. If property is insured and insurance money is received then use it to restore the property
g. Out of income of property (This can be excluded by contract)
i. Pay Government-revenue, all other charges of a public nature and all rent
ii. Make necessary repairs (after deducting amount of point (i) and his interest on
principal sum)
Loss occasioned by mortgagee’s default: If the mortgagee fails to perform any of the duties, 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

Section 77: Receipts in lieu of interest (Exception to 76):

If the Mortgagor and mortgagee have an agreement that income from property are to be taken by
mortgagee in lieu of the interest on the principal amount then he doesn’t have to maintain or
provide accounts of the income

PRIORITY

Qui prior est tempore, postiur est jure

Sections 78 and 79 are
.
“He who is first in time is first in law” Exceptions to this rule

Section 78: Postponement of prior mortgagee:

Generally prior mortgagee is preferred over subsequent mortgagee but when through the fraud,
misrepresentation or gross neglect of a prior mortgagee, another person has been induced to
advance money on the security of the mortgaged property, the prior mortgagee shall be postponed
to the subsequent mortgagee.

Section 79: Mortgage to secure uncertain amount when maximum is expressed:

Illustration: A mortgages Sultanpur to his bankers, B & Co., to secure the balance of his account with
them to the extent of Rs. 10,000. A then mortgages Sultanpur to C, to secure Rs. 10,000; C having
notice of the mortgage to B & Co., and C gives notice to B & Co. of the second mortgage. At the date
of the second mortgage, the balance due to B & Co. does not exceed Rs. 5,000. B & Co. subsequently
advance to A sums making the balance of the account against him exceed the sum of Rs. 10,000.

B & Co. are entitled to the extent of Rs. 10,000, to priority over C.

Essentials:
- Maximum amount must be there
- Future advances should be within the max limit
- Second mortgagee must have notice of first mortgage

YG LAW 10
 TPA Don’t skip the video of this topic Chapter IV

MARSHALLING AND CONTRIBUTION

Section 81- Marshalling, Securities (DOCTRINE OF MARSHALLING)

 If the owner of two or more properties mortgages them to one person and then mortgages
one or more of the properties to another person.
 The subsequent mortgagee is entitled to have the prior mortgage-debt satisfied to the
maximum out of the property or properties not mortgaged to him.
This provision shall not affect the rights of the prior mortgagee or of any other person who has
for consideration acquired an interest in any of the properties.
This provision can be excluded via contract.
Exactly like Marshalling provision under Sale: Section 56 lays down the provision of marshalling by
subsequent purchaser under sale and section 81 lays down the provision of marshalling under mortgage.

Deep Doubt: X has 2 properties, P1 & P2, He mortgages both to A, after that he mortgages P1 to B, and
then P2 to C, will doctrine of marshalling apply?

Section 82: Contribution to Mortgage-Debt (DOCTRINE OF CONTRIBUTION)

Two persons jointly mortgage a single property: When two or more persons have
ownership rights over a single mortgaged property, each person shall be liable to contribute
his part of share to the debt.
The amount shall be deemed to be the value as it was on the date of the mortgage, after
deduction of the amount of any other mortgage or charge to which it may have been
subjected to on that date.
Two properties belonging to the same owner: one is mortgaged to secure one debt and
then both are mortgaged again to secure another debt, then former debt shall be paid out
of the former property and for second debt, each property is, liable to contribute rateably
after deducting the amount of the former debt from the value of the property out of which
it has been paid.

Rateably Explanation: Illustration- If A has two properties P1 and P2. He

mortgages property P1 to B for Rs.1000 and then both P1
P1 = Rs 1500 P2 = Rs. 2500
and P2 to C for another Rs.2000. In this case, according to
Rs. 1000 of first mortgage paid from P1 the doctrine of contribution the first debt shall be paid from
Rs. 500 is the remaining value of P1 property P1 only. Then to pay of the second debt both X and
Y properties shall be liable to contribute rateably after
Remaining value of P1/Value of P2 = 500/2500 = 1/5
deducting the amount paid from property X.
1/5th of 2000 will be taken from P1 - Rs. 200
If conflict between Marshalling and Contribution,
4/5th of 2000 will be taken from P2 - Rs. 1600
marshalling shall prevail (Section 82)
Nothing in this section applies to a property liable under section 81 to the claim of the subsequent
mortgagee

YG LAW 11
TPA Don’t skip the video of this topic Chapter IV

DEPOSIT IN COURT

Section 83: Power to deposit in Court money due on mortgage

If amount of mortgage is due and right to redemption is not extinguished -
Mortgagor or any other entitled person can deposit the money due in court, court
will issue notice to the mortgagee and deposit the money in his account and will
issue a decree and the mortgaged property will be restored back to the mortgagor

Section 84: Cessation of Interest

As soon as the mortgagor or such other person has done all that has to be done by him to
enable the mortgagee to take such amount out of Court and the notice required by section
83 has been served on the mortgagee, the interest on the principal amount ceases.
83 and 84 will not deprive the mortgagee of his right to interest when there exists a contract
that he has to be served reasonable notice before payment of mortgage money.

PUISNE AND MESNE MORTGAGEE EXPLAINED

A mortgages his property to B
A mortgages same property to C
A again mortgages same property to D
A again mortgages same property to E
E can redeem property from D, C and E
D can redeem property from C, B Nemo dat quod non habet,

C can redeem property from B "no one can give what they do not have"

Section 91: Persons other than mortgagor who may sue for redemption
a) Persons who have interest in property (Puisne/Subsequent Mortgagee): Any
person who has any interest in, or charge upon the property mortgaged or in or
upon the right to redeem the same
b) Surety of Mortgagor: A surety is a person who guarantees to pay the debt if the
mortgagor fails to pay, so after payment of debt he is subrogated to the position of
mortgagee, he becomes entitled to all the remedies which the mortgagee had
against mortgagor
c) Persons who have personal interest over Mortgagor: Any creditor of the mortgagor
who has in a suit for the administration of his estate obtained a decree for sale of
the mortgaged property

YG LAW 12
TPA Don’t skip the video of this topic Chapter IV

Section 92: Subrogation (DOCTRINE OF SUBROGATION)

By operation of Law - Legal Subrogation- When the person who by the application of law is
bound to pay the debt on the behalf of mortgagor. When a third party (any person
mentioned in Section 91, except the co mortgagor) pays the mortgaged money on the
behalf of mortgagor, then all the rights of mortgagee are subrogated to that third party.

By Agreement - Conventional Subrogation- When any person who is not bound by law and
is a stranger to mortgage, provides money to the mortgagor under an agreement that he
would be substituted to the rights of mortgagee.
Nothing in this section shall be deemed to confer a right of subrogation on any person unless
the mortgage in respect of which the right is claimed has been redeemed in full.

Doubt: A, B and C jointly mortgage a property to X for 30 Lakh Rupees, A and B are not able to pay
their share of the debt, C pays the whole debt and redeems the property.
Decide whether
1. C will become the owner of the whole property because he paid the whole debt
2. C will be subrogated to the position of mortgagee of A and B.
3. C will not be subrogated to the position of mortgagee

Section 93: Prohibition of tacking (DOCTRINE OF TACKING)

When a 3rd mortgagee pays off the 1st mortgage, by application of Section 92 he is
subrogated to the rights of the 1st mortgagee
But if the 3rd mortgagee is also the 1st mortgagee, he cannot tack(fix) his place as the 1st
mortgagee over the intermediate mortgagee.
Exception: Section 79 - Mortgage to secure uncertain amount when maximum is expressed

Section 94: Rights of Mesne Mortgagee.

Where a property is mortgaged for successive debts to successive mortgagees, a mesne
mortgagee has the same rights against mortgagees posterior to himself as he has against
the mortgagor
RULE OF REDEEM UP AND FORECLOSURE DOWN – Section 91(a) and 94 respectively
‘Redeem up and foreclose down’ means that whenever there is more than one
mortgagee, the later mortgagee can redeem only those prior to him and foreclose
those after him
Section 94 (Foreclose down) read with Section 91(a) (Redeem up) lays down the
rights of mesne mortgagee. Mesne mortgagee can redeem up under Sec. 91(a) and
foreclose down under Section 94 of Transfer of Property Act, 1882.

YG LAW 13
 TPA Don’t skip the video of this topic Chapter IV

Section 95: Right of redeeming co-mortgagor to expenses

Where one of several mortgagors redeems the mortgaged property, he shall, in enforcing his right of
subrogation under section 92 against his co-mortgagors, be entitled to add to the mortgage-money
recoverable from them such proportion of the expenses properly incurred in such redemption as is
attributable to their share in the property.

Section 96: Mortgage by deposit of title-deeds: The provisions hereinbefore contained which apply to a
simple mortgage shall, so far as may be, apply to a mortgage by deposit of title-deeds.

Section 98. Rights and liabilities of parties to anomalous mortgages shall be determined by their contract as
evidenced in the mortgage-deed, and, so far as such contract does not extend, by local usage.

Note: These Notes are made to compliment the video provided in the ‘Transfer of Property –
Judiciary Course’ on YG Law App, you may miss out on important information for Judiciary Exams
which is disclosed only in the video given with these notes, to get the most out of these notes, do
refer the video provided.

Be part of YG Law Community and make studying law easier.

YouTube: YG Law; Instagram: YGLaw.in
Facebook: YGLaw.in; Twitter: YGLaw_in

Click here to view my courses

YG LAW 14
soprotection.com
TPA 2022 Chapter VIII

CHARGES
Section 100: Charges.
Where immoveable property of one person is made security for the payment of money to
another, and the transaction does not amount to a mortgage
It can be done by:
 act of parties or
 operation of law
The person for whom the property is made security is said to have a charge on the property
The provisions of a simple mortgage will apply to charge.
This section does not apply to the charge of a trustee on the trust property for expenses
properly incurred in the execution of his trust
No charge shall be enforced against any property to a transferee for consideration, without
notice of the charge.

DIFFERENCE BETWEEN CHARGE AND MORTGAGE

CHARGE MORTGAGE
Charge is the security of payment of money, Mortgage is the security for payment of a debt
which may or may not be debt
Can be created by operation of law, without any Created through act of parties only
agreement between the parties
Available against only those particular persons A mortgage creates a right in rem.
who have notice of the charge
No transfer of interest in the property, there is Transfer of interest in the property which makes
only a creation of a right of payment from a the ownership of the property limited
specific property.
Can be created on future property and operates Cannot be created on future property
on such property when it comes into existence
May be for perpetuity (unless it violates other laws) For a specific time period only.

DOCTRINE OF MERGER
Merger - Process by which two or more rights or interests in a property are combined into one.
X mortgages his property to Y
X has Right of Redemption (has limited Ownership)
Y has Right of Foreclosure (Reason why X’s Ownership is limited)

X’s Right of Redemption + Y’s Right of Foreclosure = Ownership which is not limited
Y purchases the right of redemption from X, so Y becomes the owner of the property because both
rights now reside in one person.

YG LAW 1
TPA 2022 Chapter VIII

Section 101: No merger in case of subsequent encumbrance

In the case of a subsequent encumbrance on the property, a merger would not occur as an
interest in the property is already transferred to a mortgagee/charge holder and his
encumbrance is still pending, the mortgagee/charge holder who would have took over as
the owner of the property by acquiring the right of redemption shall in this case still have
limited ownership.
Illustration:
A mortgages his property to B, then to C and then a charge is created in favor of D.

B purchases the right of redemption from A.

B’s right as a mortgagee on the property still exists, he can take from the property whatever
he was due as a mortgagee.

C and D’s encumbrance also still exist on the property which can be satisfied after B takes his
due as a mortgagee.

Section 102. Service or tender on or to agent

Where notice or tender is to be served to a person under this chapter to a person who does
not reside in the district in which the mortgaged property or some part of it is situated, then
Notice can be issued to agent who is authorised to accept it.
If agent also is not found then Court shall direct in what manner such notice shall be
served, and any notice served in compliance with such direction shall be deemed
sufficient
When no person or agent can be found then in case of Section 83, the money for
redemption may be deposited in court and such deposit shall have the effect of a tender of
such amount.

Section 103: Notice, etc., to or by person incompetent to contract.

If the notice is served or the amount is tendered to a person who is incompetent to
contract, such notice or tender can be accepted or taken by the legal curator of the property
of such person
If there is no such curator then court will appoint a guardian ad litem for the purpose of
serving or receiving service of such notice, or making or accepting such tender, or making or
taking out of Court such deposit, and for the performance of all consequential acts which
could or ought to be done by such person if he were competent to contract;
The provisions of Order XXXII of the Code of Civil Procedure, 1908 shall apply to such
application and to the parties thereto and to the guardian appointed thereunder.

YG LAW 2
 TPA 2022 Chapter VIII

Section 104: Power to make rules

The High Court may, from time to time, make rules consistent with this Act for carrying out,
in itself and in the Courts of Civil Judicature subject to its superintendence, the provisions
contained in this Chapter.

Note: These Notes are made to compliment the video provided in the ‘Transfer of Property –
Judiciary Course’ on YG Law App, you may miss out on important information for Judiciary Exams
which is disclosed only in the video given with these notes, to get the most out of these notes, do
refer the video provided.

Be part of YG Law Community and make studying law easier.

YouTube: YG Law; Instagram: YGLaw.in
Facebook: YGLaw.in; Twitter: YGLaw_in

Click here to view my courses

YG LAW 3
inprotected.com