TRANSFER OF PROPERTY

Topic - Mortgages of immovable property

Introduction-

The law relating to transfer of property is governed by the Transfer of Property Act, 1882.
Before this Act came into force there was practically no law as to real property in India. Barring
few points which were covered by certain Regulations and Acts, the Courts in India in the
absence of any statutory provisions, applied rules of English law as the rule of justice, equity and
good conscience. The Act was enacted with the object to amend the law relating to the transfer of
property by act of parties. The Act excludes from its purview the transfers by operation of law,
i.e., by sale in execution, forfeiture, insolvency or intestate succession. The scope of the Act is
limited, as it is confined to transfers inter vivos and excludes testamentary succession, i.e.,
transfers by will. The very preamble to the Act suggests that it simply defines and amends
certain parts of the law relating to transfer of property by act of parties, and it does not at all
profess to be an exhaustive enactment as is revealed by the omission of the word “consolidate”.
Therefore, the Act leaves the scope for applying rules of justice, equity and good conscience if a
particular case is not covered by any of the provisions of the Act. But if it is covered, the Act
must be applied.

Chapter II of The Transfer of Property Act, 1882 deals with both movable and immovable
property.
Section 58 to 104 of the Transfer of Property Act, 1882 deals with mortgages and charges.
According to Section 3 of the ACT -

Immoveable property does not include standing timber, growing crops or grass; “instrument”,
means a non-testamentary instrument.

Under Chapter IV , Section 58 to 104 of the Transfer of Property Act, 1882 deals with
mortgages and charges –

Under Section 58 of the act the following words are defined -

Mortgage
A mortgage is the transfer of an interest in immovable property for the purpose of securing the
payment of money advanced, an existing or future debt or the performance of an engagement
which may give rise to a pecuniary liability.
Mortgagor – Person who transfers the interest in an immovable property
Mortgagee - Person to whom it is transferred is called the mortgagee.

Mortgage Money- The principal money and interest of which payment is secured for time
being .

Mortgage Deed- Instrument by which the transfer is brought into effect .

Mortgage-
A mortgage is a transfer of an interest in immovable property and it is given as a security for a
loan. The ownership of an immovable property remains with the mortgagor itself and some of
the interest in the property is transferred to the mortgagee who gives the loan.

Essential conditions of a mortgage:

• Transfer of interest to the mortgagee.

• The interest created has to be in a specific immovable property.

• The mortgage should be backed by consideration.

KINDS OF MORTGAGE-

1) SIMPLE MORTGAGE

• It is defined under Section 58 (b)

• In a simple mortgage, the mortgagor agrees to pay the mortgage money , without transferring
immovable property to the mortgagee .
• The mortgagee agrees on a condition that in the event of not payment of the mortgage
money the mortgagee has all the right to sell the mortgaged property and to use the proceeds
of the sale ; such a transaction is called a simple mortgage.

Characteristics Of a Simple Mortgage –

1) a personal obligation on the part of the mortgagor to pay the debt,
2) an express or implied authority given to mortgagee to cause the property to be sold through
the intervention of the Court

3) no transfer of the ownership

Remedies Of A Simple Mortgagee –

 A mortgagee in this type of mortgage cannot foreclose (i.e. keep the property in lieu of
the mortgage money).
 The mortgagee can acquire only the right of sale, and that too, only through the Court.
 The mortgagee can also sue on the personal covenant (under section 58), in as much as
the simple mortgagor binds himself to repay.

2) CONDITIONAL MORTGAGE

• It is defined under Section 58 (c)

• In this the mortgagor ostensibly sells the mortgaged property under 3 conditions , and the
mortgagee shall have the right to sell the property if:

1. There is a default in payment of mortgage money by the mortgagor on a certain date.

2. As soon as mortgagor makes the payment the sale shall become void.
3. On the payment of money by the mortgagor, the property is transferred ; such a transaction is
called a mortgage by conditional sale.

A mortgage by conditional sale is an ostensible sale which turns into an absolute sale when there is a
breach of the condition as to the payment of the money ; in other words, on the breach of the condition,
the contract stands executed , and the transaction is void and is closed , and becomes one of absolute sale
to be enforced in a manner which is called foreclosure.

A mortgage is foreclosed by obtaining a declaration from the court to the effect that the mortgagor will be
debarred of his right of redemption. Such a declaration turns the ostensible ownership of the mortgage
into absolute ownership.

Section 59 tells us how such a mortgage can be effected –

1) where the principal money secured is 100rs or more , by a registered instrument signed by the
mortgagor and attested by at least 2 witnesses,

2) when the principal money secured is less than 100rs , by a registered instrument signed and attested as
aforesaid or by delivery of the property.

Remedies Of A Conditional Mortgagee –

Under Section 67- The remedy open to the mortgagee by conditional sale is by foreclosure only
and not by sale.
3) USUFRUCTUARY MORTGAGE

• It is defined under Section 58(d)

• In this mortgage, the mortgagor delivers the possession of the property to the mortgagee and
authorizes the mortgagee to retain such property until the payment is made by the mortgagor
and further authorize him to receive the rent or profit arising from such mortgaged property
and to appropriate the same instead of payment of interest.
Such a transaction is called a Usufructuary transaction.

Characteristics of Usufructuary Mortgage :

1) There is delivery of possession to the mortgagee.

2) The mortgagee is to retain possession until repayment of the money and is to receive rents and
profits in lieu of interest, or in payment of the mortgage-money or partly in lieu of interest and
partly in payment, of the mortgage-money.

3) The mortgagor is entitled to redeem when the amount due fs personally paid or the debt is
discharged by rents and profits received by the mortgagee (Section 62)

4) If the mortgage is for 100rs, or more, it must be registered; if below 100rs, it may be by a
registered deed or by delivery of property (Section 59)

5) No time-limit is fixed for repayment.

Remedies Of a Usufructuary Mortgagee –

An usufructuary mortgagee cannot sue, either for sale or for foreclosure.

His only remedy is to retain possession of the mortgaged property till the mortgage money is
paid , and to appropriate the rents and profits thereof till then, as per the terms of the mortgage
deed.

It may be noted, however, that if the mortgagee is not in possession or if he loses such
possession, he may sue to obtain possession and also the past profits; he may also sue for the
mortgage money under Section 68.

Neither the remedy of foreclosure nor that of a sale is open to usufructuary mortgagee, as he
realizes his right by possession and enjoyment of the profits. When his possession is disturbed,
the usufructuary mortgagee has a personal remedy under Section 68 to sue for the mortgage-
money

4) ENGLISH MORTGAGE
• It is defined under Section 58(e)
• In this mortgage, the mortgagor transfers the property absolutely to the mortgagee and binds
himself/herself that he/she will repay the mortgage money on a specified date and lays
down a condition that on the repayment of amount , mortgagee has to re-transfer such
property.
This kind of transaction is called an English mortgage

Characteristics Of English Mortgage –

1) It is followed by delivery of possession.

2) There is a personal covenant to pay the money.

3 It is brought into effect by an absolute transfer of property, with a provision of re-transferring

in the case of repayment of the money due.

4) Power of sale out of Court is conferred on certain persons under certain circumstances stated
under Section 69.

Remedy to the Mortgagee:

His remedy is by sale, and not by foreclosure.

Though Section 58(e) states that the mortgagor transfers the property absolutely, yet it must be noted that
an absolute transfer can never be a mortgage. The very definition of a mortgage is that there is the transfer
of a limited interest for the purpose of securing the debt.

Therefore, the word absolutely is not to be understood in its literal meaning; it merely emphasises that the
characteristics of a sale are more pronounced in the case of an English mortgage, but it does not suggest
that there is an absolute transfer in the nature of a sale.

5) DEPOSIT OF TITLE-DEEDS

• Also known as equitable mortgage.

• It is defined under Section 58(f).
• Where a person –
a) in the towns of Calcutta, Madras and Bombay, and in any other town which the State
Government concerned may, by notification in the 1 Official Gazette specify in this behalf,
(e.g., , Allahabad, Delhi, Mysore etc.),
(b) delivers to a creditor ( or to the creditor’s agent), the documents of title to immovable
property,
(c) with intent to create a security thereon, -
the transaction is called a 'mortgage by deposit of title-deeds'. The provisions which apply to
a simple mortgage apply, so far as may be, to a mortgage by deposit of title-deeds.

Characteristics of a mortgage by deposit of title-deeds-

1) It is not necessary that all the deeds should be deposited. It is sufficient if material documents
are deposited . It comes into effect by deposit of material title-deeds.

2) No delivery of possession of property takes place.

3) It is made to secure a debt or advances made, or to cover future advances.

4} No registration is necessary, even if there is a writing recording the deposit (Section 59).

5) It prevails against a subsequent transferee who takes under a registered instrument.

6) It prevails against all who are not bona fide purchasers for value without notice.

Remedy To The Mortgagee -

Section 96 of the Act puts equitable mortgages on the same footing as simple mortgages.

Therefore, the remedy of the mortgagee by deposit of title-deeds is by a suit for sale; he is not
entitled to sue for foreclosure. He can also sue for the mortgage-money. (Nityanand v. Rajpur
Chhaya Bani Cinema Ltd., 1953) . The mortgagor's remedy is a suit for redemption, and not an
action to recover the title-deeds.

6)ANOMALOUS MORTGAGE

• It is defined under Section 58(f).

• A mortgage which is not –
1. a simple mortgage,
2. a mortgage by conditional sale,
3. a usufructuary mortgage,
4. an English mortgage, or
5. a mortgage by deposit of title deeds,

within the meaning of this section is called an anomalous mortgage.

The rights and liabilities of the parties to such a mortgage are to be determined –

1) by their contract, as evidenced in the mortgage-deed, and failing that,

2) by local usage .

In other words, it is a mortgage other than those categorically defined in the section. Instances of such
mortgages are the peruartham , otti, and kanom mortgages of Chennai and the Saan mortgage of Gujarat.

Characteristics of anomalous mortgage –

1) It would include a simple mortgage ,usufructuary mortgage and mortgage by conditional sale.
2) Possession may or may not be delivered.
3) If for 100rs or upwards, it must be registered; if less than 100rs , it may be by a registered
deed or by delivery of possession (Section 59).

Following Two terms in common use in connection with mortgage may be considered here .
1) Sub-mortgage,
2) Puisne mortgage.
-Sub-mortgage: Where the mortgagee transfers by mortgage his interest in the mortgaged
property, or creates a mortgage of a mortgage the transaction is known as a sub-mortgage.
E.g., where P mortgages his house to Q for Rs. 20,000 and Q mortgage his mortgagee right to R
for Rs. 17,000. Q creates a sub-mortgage.
-Puisne mortgage: Where the mortgagor, having mortgaged his property, mortgages it to another
person to secure another loan, the second mortgage is called a puisne mortgage.
E.g., where P mortgages his house worth Rs. 100000 to Q for Rs. 30,000 and mortgages the
same house to R for a further sum of Rs. 50,000, the mortgage to Q is the 1st mortgage and that
to R the 2nd or puisne mortgage. R is the puisne mortgagee, and can recover the debt subject to
the right of Q, the first mortgagee, to recover his debt of Rs.30,000 plus interest.

Remedy To The Mortgagee -

Section 67(a) The mortgagee's remedy is by sale and foreclosure, if the terms of-the mortgage
permit it.
Section 67(b) The remedy of a mortgagor, if he becomes a trustee or legal representative I of the
mortgagee, is by a suit for sale only.

RIGHTS AND LIABILITIES OF MORTGAGOR AND MORTGAGEE

RIGHTS OF MORTGAGOR-
1) Right of Redemption

• Section 60 states one of the important rights of the mortgagor – the right to redeem the
mortgage.

• Once the money has become due on the specified date the mortgagor has the right to get back
the mortgaged property on paying the money to the mortgagee.
• Right to redemption is a statutory and legal right which cannot be extinguished on the
entering into any agreement.

2) Right to transfer to a third party-

• Section 60A of act states that the mortgagor may direct the mortgagee to assign the mortgage
debt and authorize him to transfer the property to a third party instead of transferring him the
same.
• The object of this section is to enable the mortgagor to pay off the debt of the mortgagee by
taking a loan from another person on the security of the same property.

3)Right to inspection and production of documents-

• Section 60B states that the mortgagor may inspect anytime the document of title relating to
the mortgaged property which is in the custody of the mortgagee.
• The costs and expenses incurred while inspecting the documents may be borne by the
mortgagee.

4)Right to accession

• As per Section 63 of the act , during the subsistence of the mortgage if any accession is made
to the mortgaged property where the property is in possession of the mortgagor itself and
then the mortgagor has a right to take in accession after the redemption of the mortgage.
• Accession can be of two types:

1. Natural .
2. Acquired

5) Right to improvement

• As per Section 63A of the act , during the subsistence of the mortgage if any improvement is
made to the property where the property is in possession of the mortgagee and then the
mortgagor has a right to take the improvements made to the property upon the redemption.
• But where the improvements were at cost of the mortgage by preserving the property from
destruction then the mortgagor is liable to pay the cost which is incurred by the mortgagee in
preserving the property.

6) Right to a renewed lease

• As per Section 64 of the Act, where the property which the mortgagor has given for
mortgage is a leasehold property if the mortgagee renews the leases during the subsistence of
mortgage the mortgagor shall obtain the benefit of the lease upon the redemption of the
mortgage.

7) Right to grant a lease-

• As per Section 65A of the act a mortgagor shall have the right to grant a lease of which is
lawfully in possession with the mortgagee and such lease shall be binding on the mortgagee
subject to the following conditions:

1. lease shall be according to the local laws, custom or usages.

2. the lease shall not contain a covenant for renewal.
3. no rent or premium shall be paid in advance.
4. in case lease of buildings, the duration of the lease shall not exceed not more than
three years.
5. the lease shall come into effect within six months from the date on which it is made.

LIABILITIES OF MORTGAGOR
Section 65 & Section 66 deals with the liabilities of the mortgagor.

Section 65 is the implied liabilities which are laid upon the mortgagor. Subject to the contrary,
every mortgagor is deemed to have made the following covenant.

1) Covenant for title

• Under Section 65(a) there is an implied covenant that the mortgagor transferring the interest
in the property to the mortgagee belongs to the mortgagor only.
• And it is necessary that the mortgagor possess the transferable interest in the property.
• In case mortgagor makes a breach in the covenant the mortgagor is liable to compensate.

2) Covenant for the defence of the title

• As per Section 65(b) the mortgagor has a duty impliedly to either defend the title if anyone
tries to take away the title from the mortgagee or help the mortgagee in defending the title.
• By doing so, the mortgagor bears all the expenses incurred while defending the title.

3). Covenant for payment of public charge

• Under Section 65(c) there is an implied duty to the mortgagor that upon the execution of the
mortgage the mortgagor shall pay all the necessary changes.
• If the mortgagor fails to meet the required charges the property would be sold by the public
authorities and realise the charges.

4). Covenant for payment of rent

• As per Section 65(d) of the Transfer of the Property Act, 1882 where the property mortgaged
by the mortgagor is a leasehold property there is an implied duty of the mortgagor to pay the
rent of the mortgaged property.
5). Covenant for the discharge of prior mortgage

• As per Section 65(e) there is implied duty of the mortgagor to discharge the prior mortgage if
any.
• There is always a presumption that the mortgagor has a covenant with the subsequent
mortgages to pay off the mortgage on becoming due.
• In such subsequent mortgage if the mortgagor makes a breach the subsequent mortgagee
would have the right to sue for his mortgaged money.

6) Right To Reasonable Waste (Section 66)

A mortgagor in possession of the mortgaged property 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
thereto, if the security is insufficient or will be rendered insufficient by such act.
A security is deemed to be insufficient, unless the value of the mortgaged property exceeds by one-third,
or if consisting of buildings, exceeds by one-half, the amount for the time being due on the mortgage.

Under this section , the security will be sufficient if the value of the mortgaged property exceeds
the mortgage-amount by one-third. Thus, if the mortgage amount is 10 lakhs, the value of the
property should be at least 14 lakhs. But in the case of buildings, it should exceed, not by one-
third but by one half. Thus, in the above illustration, if the security is a building, its Value should
be at least 16 lakhs.

RIGHTS AND LIABILITIES OF MORTGAGEE

The rights and liabilities of a mortgagee are given under Section 67 to 77.

Rights of Mortgagee in Possession –

- RIGHT TO FORECLOSURE OR SALE-

• As per Section 67 of Act, the mortgagee has a right to foreclosure or sale.

• When the mortgagor does not pay the mortgage money after the specified date is over and the
mortgagor’s right to redeem the mortgaged money has become complete but he has failed to
avail that right then mortgagee gets a right to institute suit for a decree that the mortgagor is
absolutely debarred of his right to redeem the property.
• The difference between the right to redemption and right to foreclosure is that the former is
an absolute right whereas the right to foreclose is not.
• The mortgagor cannot limit the right of redemption but the right to foreclose can be made
subject to a contract between the parties.

-RIGHT TO SUE
• As per Section 68 of Act,the mortgagee has every right to sue for the mortgaged money.
• The mortgagee can sue for mortgaged money in the following circumstances:

1. where the property mortgaged by the mortgagee has been destroyed either wholly or
partially without the fault of the mortgagee.
2. where the mortgagors fail to deliver the possession to the mortgagee.
3. where the property mortgaged, the mortgagee is deprived of the security due to some
wrongful act done by the mortgagor.
4. where mortgagor binds himself to repay the money to the mortgagee.

-RIGHT TO SELL -

• As per Section 69 of the act the mortgagee has every right to sell the mortgaged property if
the mortgaged money has not been received
• This right can be exercised by the mortgagee when the mortgagor makes a default in
payment of the mortgaged money after the specified date is over.
• This right can be exercised without the intervention of the court but only in the following
cases:

1. if the mortgage is an English mortgage both the mortgagor and mortgage should not
be buddhist, Hindu, Muslim, , or a member of any other race as specified by the state
government;
2. when there is a contract between the mortgagor and mortgagee the sale would take
place without the intervention of the court in case of default in payment of mortgaged
money;
3. to exercise the above right the mortgaged property should be situated either in
Allahabad ,Calcutta, Madras, Bombay, , Kanpur, Cochin , Lucknow, Ahmedabad
,Coimbatore, and Delhi.

Conditions to exercise of Power-

Before the sale proceeding can take place the mortgagee has to fulfil the following conditions:

• The notice has to be served on the mortgagor in writing and three months have to be
elapsed from sending the notice.
• When the money is unpaid for three money and mortgaged money is at least 500rs in
arrear.

-RIGHT TO APPOINT A RECEIVER

• A receiver is appointed only if there happens to be a sale under Section 69 of the Transfer of
Property Act, 1882.
• The appointment of the receiver is made according to the mortgaged deed.
• The person appointing as a receiver should be willing to act as a receiver if he is unable to act
as a receiver then the mortgagee can appoint the receiver if the mortgagor agrees. In case the
mortgagor does not agree to the appointment made by the mortgagee then the mortgagee can
apply to the court for the appointment.
• The money received by the receiver shall distribute for the following to below case

1. he may discharge all the rents, taxes, land revenues, and any other charge which is
affecting the property.
2. he can claim back the payment along with the interest.
3. he can keep a sum of money as commission and he may pay premiums on the various
insurances insured.

-RIGHT TO ACCESSION TO MORTGAGED PROPERTY

• As per Section 70 of the act , if there is a contract between the mortgagor and
mortgagee that after the date of mortgage that the mortgagee shall have the right to the
accession made to the mortgaged property then the mortgagee shall have right to all
the accessions made.

-RIGHT OF MORTGAGE TO SPEND THE MONEY

• As per Section 72 of the act the mortgagee has a right to spend the money when it is
necessary.
There are few circumstances in which the mortgagee has a right to spend the money:

1. the mortgagee can spend the money on preserving the mortgaged property from
destruction, forfeiture and sale.
2. the mortgagee can spend the money if circumstances arise to protect the mortgagor’s
title to the property.
3. when the mortgaged property happens to be a renewable leasehold property.
4. the mortgagee can spend the money on insuring the mortgagor’s property.

-RIGHT TO PROCEED OF REVENUE SALE OR COMPENSATION ON

ACQUISITION

• As per Section 73(1) of the act if the mortgaged property is sold due to the non-
payment of government dues then the mortgagee shall have every right to claim back
his mortgaged money from such sale.
• As per Section 73(2) of the act if the mortgaged property is acquired under the land
acquisition act or any other act and the compensation is paid the mortgagee can claim
his debt from such compensation.
LIABILITIES OF MORTGAGEE IN POSSESSION
As per Section 76 of the Act, 1882 list down the duties of the mortgagee who is in possession of
the property which belongs to the mortgagor.

The duties mentioned under are the statutory duties except for the duties which are mentioned
under clauses (c) and (d) the duties under these clauses are mentioned in the contract by the
parties.

→ Duty To Manage The Property

• The mortgagee has a duty to take reasonable care in the property of the mortgagor.
• Though he has a liability to take reasonable care in the property the mortgagee is not
bound by the directions given by the mortgagor and the mortgagee has acquired
absolute rights in managing the property.
• The only condition which is put forward by the mortgagor is that he cannot lease the
property beyond the termination of his interest in the mortgaged property.

→ Duty to collect rents and profits

• The mortgagee who is in possession of the mortgagor’s property can collect the rent
and profits arising from the property.
• One outstanding feature of usufructuary mortgagee is the rent and profits collected
from the property are appropriated by the mortgagee instead of payment of interest.
• Mortgagee becomes liable for the collection of rent and profit only to the property
which he is liable to acquire the rent and profits and not liable for the whole rental
property.

→ Duty to pay rent, revenue and public charges

• If there is an agreement between the mortgagor and mortgagee that the mortgagee has
to pay the rents, revenue, taxes and outgoings then the mortgagee is liable to pay all of
them which have been agreed by him.
• The mortgagee is not allowed to take the benefits without paying the taxes etc.
• In case the money which has been obtained from the property is insufficient for
paying the charges, he may pay out of his own pocket and later add the amount which
has been paid by him to the debit account.

→ Duty to make necessary repairs

 • If there is an agreement between the mortgagor and mortgagee that the mortgagee is
bound to carry out all the necessary repairs in the property then the mortgagee is liable
to take care of the necessary repairs.
• The necessary repairs in the property are to be made only when there is a surplus
amount from the rents and profits.

→ Duty not to commit any destructive act

• While the property is in the mortgagee’s possession he is prevented from committing

any act which is either in destructive nature or is injurious to the mortgaged property.
• He is prohibited from carrying out any acts which may result in reducing the value of
the property.
• If the property is destroyed because of acts of god then the mortgagee is not liable for
the property.

→ Duty towards the proper use of insurance money

• Where the mortgaged property has been insured against loss by fire it is the duty of
the mortgagee to apply for the insurance money in restoring the property.
• The mortgagee is also bound to apply the money received under the insurance policy
in reinstating the property.
• The property which is to be insured only for the two-third of its value.

→ Duty to keep the accounts

• The mortgagee has a statutory duty under this provision in keeping the correct
accounts of all incomes arose and expenses incurred by the mortgagee.
• The only exception is when the mortgagee is entitled to adjust the income against the
interest he is not allowed to give full accounts because something there may be no
money left to use for other expenses.

→ Duty to apply rents and profit

• This clause provides the manner in which the mortgagee who is in possession of the
property has to apply for rents and profits during the mortgage.

LAW AS TO PRIORITY OF SECURITIES

Doctrine of Priority
Section 78 - Where, 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 is to be postponed to the subsequent mortgagee .

QUI PRIOR EST TEMPORE, POT/OR EST JURE - The rule as to priority of mortgages is
stated in the equitable maxim qui prior est tempore, potior est jure, enunciated in Section. 48
(He who is first in time is first in law.)

Section. 78 is an exception to the above principle. It lays down that the prior legal estate would
be postponed to a subsequent estate where the owner of the legal estate had assisted in, or
connived at, the fraud which led to the creation of a subsequent equitable estate without notice of
the prior legal estate.

The mortgagee who is first in time has priority over a subsequent mortgagee of the same
property (Section 48). But the following are two exceptions to this general rule:

1. The prior mortgagee loses his priority by

i) fraud, . (Section 78.)
ii) misrepresenta tion . (Section 78.)or
ii) gross negligence. (Section 78.)
2. Where P mortgages his property to Q to secure a present advance as well as future
advances upto a fixed maximum, then any further advance made by him (Q) within that
maximum, will be treated as part of the first mortgage to R, provided R had notice of Q's
mortgage, (Section 79)

DOCTRINE OF MARSHALLING
• Marshalling is defined under Section 81 of the Act.
• In simple terms, marshalling means arranging things.
• The doctrine of marshalling means when there are two or more properties which belong to
the mortgagor and the mortgages those properties to one mortgagee and then subsequently
mortgage those properties which have been mortgaged to another mortgagee.

DOCTRINE OF CONTRIBUTION

• The doctrine of contribution provides that several properties mortgaged to secure one
debt are liable to contribute to that debt rateably in proportion to their values at the date
of tt1e mortgage, the amount of the previous mortgage or charge being deducted. The
rule of contribution applies, not on/ywhere several properties are mortgaged and their
owner is compelled to satisfy the whole mortgage-debt, but also where only one property
held by several co-owners is mortgaged and the portion of one co-owner is made to
satisfy the mortgage.
• Two simple rules are laid down in this connection:
1 . Where property subject to the mortgage belongs to two or more persons having
distinct and separate rights of ownership therein, the different shares or parts of such
 property owned by such persons are, in the absence of a contract to the contrary, liable to
contribute rateab/y to the mortgage-debt.
2. Where, of two properties –
i) belonging to the same owner,
ii) one is mortgaged to secure one debt,
iii) and then both are mortgaged to secure another debt,
iv) and the former debt is paid out of the former property, -
each property is, in the absence of a contract to the contrary, liable to contribute rateably
to the latter debt, after deducting the amount of the former debt from the value of the
property out of which it has been paid .

Conclusion
The concept of mortgage is one of the essential concepts under the Transfer of Property Act, 1882 as
it helps securing the debt to the mortgagor and it also helps in redeeming the property as soon as the
mortgagor pays back the amount due to the mortgagee.