JAMIA MILLIA ISLAMIA

Faculty of Law

Project

‘Mortgage and it’s kind’

The Transfer of Property Act, 1882

Submitted to-
Prof. Dinesh Kumar

Submitted by-
Pragati Yadav

B.A. LL.B. (self-financed) 3rd semester

Batch-2018-2023

1
 TABLE OF CONTENT

Introduction & Definition 4

Characteristics 4-5
Ingredients of mortgage 5-6
Kinds of mortgage 6-13
(a) Simple mortgage.
(b) Mortgage by conditional sale.
(c) Usufructuary mortgage.
(d) English mortgage.
(e) Equitable mortgage or mortgage by deposit of little deeds.
(f) Anomalous mortgage

Bibliography 14

2
 ACKNOWLEDGMENT

I feel highly elated to work on this dynamic and highly important topic that is “mortgage and it’s
various kind”. This topic instantly drew my intention and attracted me to research on it.

So, I hope I tried my level best to bring a new idea and thoughts regarding the basics of this topic
not to forget the deep sense of regard and gratitude to my faculty advisor, Prof. Dinesh Kumar
who played the role of a protagonist. Last but not the least; I think all the members of the Jamia
Millia Islamia and all others who have helped me in making this project a success.

3
 INTRODUCTION

Section 2 (17) of the Indian Stamp Act,1899, a mortgage is defined as follows : “ mortgage deed
includes every instruments where by, for the purpose of securing money advanced or to be
advanced, by way of loan or an existing or future debt or the performance of an engagement, one
person transfers or creates, to or in favour of another a right over or in respect of specified
property.1”

This definition is much wider and more general than that given in the transfer of property act,
because it applies to any specified property both movable and immovable (whereas mortgage of
movable property is excluded from transfer of property act). And refers to the performance of an
engagement and is not restricted to an engagement giving rise to a pecuniary liability only both
definition are materially different.

A mortgage is a transfer of an interest in specific immovable property as security for the

repayment of a debt. But such interest itself is immovable property. The nature of the right
transfer depends on the form of the mortgage.2

In the case of B. Jayashankarappa and others v. D. S. Gulwadi,3 it was held that a reading od sec
58 per se shows that mortgage, no doubt is transfer, but not the transfer of a absolute ownership
rights and In this respect it differs from Sale. A mortgage is said to be a transfer of limited
interest in a specific immovable property. The purpose of mortgage is said to secure the payment
of money, advanced as loan or an existing or future debt. In a sale, all rights of ownership that
the transferor possesses in the property, pass on by transfer to the transferee. In a mortgage, some
rights are transferred to the mortgagee, while some others remain with the mortgagor. This is one
of the basic difference between sale and mortgage.

in terms of the definition, the following are the characteristics of a mortgage :

1
G. P. Tripathi, the transfer of property act, 1882,(central law agency, Allahabad, 2018).
2
Ali Hussain v. nilla kanden,(1864) 1 Mad. H. C. 856.
3
A.I.R. 2000 Karnataka 359.

4
 (i) A mortgage can be effected only on immovable property. Immovable property
includes land, benefits that arise out of land and things attached to earth like tress,
buildings and machinery. But a machine which is not permanently fixed to earth and
is shift able from one place to another is not considered to be immovable property.

(ii) A mortgage is the transfer of an interest in the specific immovable property. This
means the owner transfers some of his rights only to the mortgagee. For example, the
right to redeem the property mortgaged.

(iii) The object of transfer of interest in the property must be to secure a loan or
performance of a contract which results in monetary obligation. Transfer of property
for purposes other than the above will not amount to mortgage. For example, a
property transferred to liquidate the prior debt will not constitute a mortgage.

(iv) The property to be mortgaged must be a specific one, i.e. it can be identified by its
size, location, boundaries etc.

(v) The actual possession of the mortgaged property is generally with the mortgagor.

(vi) The interest in the mortgaged property is re-conveyed to the mortgagor on repayment
other loan with interest due on.

(vii) In case, the mortgagor fails to repay the loan, the mortgagee gets the right to recover
debt out of the sale proceeds of the mortgaged property.

INGREDIENTS OF MORTGAGE [sec. 58 (a)]

The followings are six ingredients of sec. 58 (a) :

5
 (i) Transfer of an interest. – A transaction of mortgage involves the transfer of an
interest from the mortgagor to the mortgagee. on this point this differs from sale
because in sale, on the contrary, there is complete transfer of all the interest in the
property. The mortgage is transfer of interest less than ownership.

(ii) Mortgagor – the person who actually mortgages the property is a mortgagor, but a
new sec. 59 introduced by the amendment act, 20 of 1929 says that a mortgagor
includes a person deriving titles under executers, administrators, who derive their title
from the mortgagor.4 A mortgage by the minor, who is incompetent to contract , is
void.

(iii) Mortgagee – a mortgagee is a person in whose favour a mortgage is created.

(iv) Mortgage money – the expression ‘mortgage money’ means the principal money and
the interest for which the payment is secured for the time being. Accordingly, a
mortgagor can not redeem the property on the repayment only of the principal money.
He must also pay the interest thereon because the interest is regarded as a charge
upon the property just as much as the principal amount.

(v) Mortgage deed – instrument by which transfer is effected is called a mortgage deed.

(vi) Specific immovable property – the interest transferred is that of a specific

immovable property. the property, which has to be mortgaged, must be defined
specifically and not in general terms. The property must also be an immovable
property. the property must be specifically mentioned in the mortgage deed.

KINDS OF MORTGAGE

The sec. contemplates six kinds of mortgage :

4
Midnapore Zamindari Co. Ltd. v. Saradendu Mukhopdhaya, (1948) Cal. 250.

6
 (g) Simple mortgage.
(h) Mortgage by conditional sale.
(i) Usufructuary mortgage.
(j) English mortgage.
(k) Equitable mortgage or mortgage by deposit of little deeds.
(l) Anomalous mortgage.

SIMPLE MORTGAGE [section 58(b)]

three condition is necessary for creation of simple mortgage :

(i) The mortgage retain the possession of the mortgaged property;

(ii) The mortgagor must personally undertake to pay the mortgage-money; &
(iii) The parties must expressly or impliedly agree that in the event if the mortgagor,
fails to pay, according to his contract, the mortagagee shall have right to cause the
mortgaged property, to be sold.

(a) Power of Sale

In default of payment, a simple mortgage, gives to the mortgagee a right not to to
possession but to sale which he must work out in execution proceeding.5

(b) Personal undertaking to pay

the chief peculiarity of a simple mortgage is that the mortgagor gives a personal
undertaking to the mortgagee to repay the amount due under the mortgage. Such
covenant may be either express or implied. 6

(c) Possession not given

Third characteristics of simple mortgage is that possession is not given.7 If simple
mortgage sues to enforce his security, a decree of possession would be illegal, and if

5
Supra 1, p. 417.
6
Wahid-un-nissa v. Gobardhan, 22 All. 453
7
Supra 1, p. 417.

7
 passed, would not operate as a foreclosure but would make the simple mortgage, a
mortgage with possession.8
(d) Remedy in Simple Mortgage - to remedies are there:
Firest, Personal obligation can force him to pay. Suit can be filled against him
personally.
Second, Sale of security. Security for debt can be sold by decree of court. Filing of
suit is must.

MORTGAGE BY CONDITIONAL SALE [sec. 58 (c)]

It is transaction in which the mortgagor ostensibly sells, the mortgaged property on condition :

(i) That in default of payment of the mortgage money on a certain date, the sale shall
become absolute;
(ii) But on such payment being made the sale shall become void;
(iii) The buyer shall re-transfer the property to the seller.
(a) Condition in same deed
is not a sine quo non to embody condition of mortgage in the sale deed. If mortgage
condition is incorporated in separate agreement, it would also fulfil the condition of
conditional sale.9
In Guwahati case,10 the owner of land took rupees 3000/- as loan from the appellant. The
appellant executed an agreement reconvey property to owner on the very same day sale-
deed was executed. Reding the agreement of reconveyance on the redemption of loan,
certainly indicates that the sale of land was not absolute but a conditional one.
(b) No Personal Liability
In this form of mortgage, there is no personal liability on the part of the mortgagor to pay
the debt. The remedy of the mortgagee is by foreclosure.
A mortgage by conditional sale is an ostensible sale which is to ripen into absolute sale
on breach of the condition as to payment.

8
Sri Raju Pappammarao v. Ram Chandra Raju, 19 Mad. 249.
9
Supra 1 , p 419.
10
(2009) (6) A.L.J. (N.O.C.) 1041 (Gau.).

8
 (c) Ostensible sale- Word ‘ostensible’ in sec. 58 (c) has two meaning-
First, that the object bears a certain form or appearance without suggesting that it’s or is
not that of which it has the superficial appearance; and
Second, that the object bears a certain appearance but, is not really that of which is bear
the appearance.
To decide whether transaction is a mortgage by conditional sale or an outright sale, it’s
true nature has got to be determined by the intention of the parties.
(d) Remedy of conditional sale
Foreclosure is the only remedy open to the mortgagee in a mortgage by a conditional sale

Right of foreclosure can be made use of only by suit praying for decree of foreclosure.
The right arise when the mortgage money is not paid on fixed date, sale become absolute
& right to file suit for foreclosure arise. There can be no foreclosure directly it can only
by the decree of court.

USUFRUCTUARY MORTGAGE [ SEC. 58(d)]

Usufructuary mortgage is one in which there is:

First, delivery of possession, or an express or implied undertaking on the part of the mortgagor to
deliver it;

Second, the enjoyment of the usufruct by the mortgagee until all his dues under the mortgage are
paid off,

Third, the mortgagor does not incure any personal liability to repay the money;

Fourth, that there being no personal liability to pay there is no forfeiture and therefore, the
remedies by way of foreclosure or sale are not open to the mortgagee.11

Delivery doesn’t means delivery immediately. If the mortgagor can’t give immediate possession
it’s sufficient, if he gives right to possess.Under sec. 58 (d) no time is fixed for the repayment. If

11
Narpat Chand A. Bhandari v. Shantilal Moolshanker Jani, A.I.R. 1993 S.C. 712.

9
the parties stipulate that the mortgage is for a definite period, it’s no longer a usufructuary
mortgage but become an anomalous one.12

In this form of mortgage the property is given as a security to the mortgagee who’s let into
possession or is promised to be let into possession of the property and it permitted to repay
himself out of rents and profits of such property or out of portion thereof.

Where the adjustment of mortgage money, the mortgagee made by mortgagor, usufructuary
mortgage comes to an end if thereafter full adjustment of mortgage money, the mortgagee refuse
to perform the act he’s bound to do so under sec. 60 if TPA.13

Remedy Of Usufructuary Mortgage

Mortgagee having opportunity of repaying himself is not put to the necessary of going count.
The consequence of absence of person covenant to pay is that the mortgagee can’t sue sale of the
property.

Not being bound to bring a suit, usufructuary need not to be afraid of limitation.In this condition
mortgagee have an advantageous position. if the mortgagor neglects to bring the redemption suit
in time he gets an opportunity for prolonged enjoyment of the property. if no redemption suit
brought within limitation period, he becomes the absolute owner of the property.

Disadvantage of mortgagee

First, he’s under an obligation to exercise great care and caution in the management of the
property.

Second, involves locking up one’s money. because the usufruct of property may not be sufficient
to an part of principal after payment of insert.14 There is no remedy either by foreclosure or by
sale.

ENGLISH MORTGAGE [sec. 58 (e)]

12
A.I.R. 1963 S. C. 1182.
13
Hikmatullah v. Imam Ali, 12 All 203
14
S.S. Ahobala v. P.S. Kaliamurthi, A.I.R. 1962 Mad. 308.

10
An English mortgage is a transaction in which the mortgagor binds himself to repay the
mortgage money on a certain date, and transfer the mortgaged property absolutely to the
mortgagee, but subject to a condition that the mortgagee will retransfer it to the mortgagor upon
payment of mortgage money as agreed.15

The three essentials of this form of mortgage, therefore, are,

First, that the mortgagor should bind himself to repay the mortgage money on certain date;

Second, that the property mortgaged should be absolutely transferred to the mortgagee; and

Third, that such absolute transfer should be made subject to a proviso that the mortgagee will
reconvey the property to the mortgagor on payment by him of the mortgage money on the day on
which the mortgagor bound himself to repay the same.16

(a) Liability of mortgagor

Mortgagor under takes a personal liability. If a date is fixed, the facts that in a certain
event the date od payment is postponed to a later date does not deprived it of it’s
character as in English mortgage.

(b) No absolute interest

Section 58 (e) can’t be construed as declaring an English mortgage to be an absolute
transfer of property but as merely declaring that such a mortgage would be absolute.
(c) Rights of possessor
the mortgagee in the English form entitled to the possession. But when the mortgagor is
in possession, he’s entitled to profit and need to account to the mortgage.

EQITABLE MORTGAGE [sec. 58 (e)]

15
Supra 1 , p. 434.
16
Narayan v. Venkataramma, 25 Mad. 220 F.B.

11
This is also known as mortgage by deposit of title deeds. The ingredients of an equitable
mortgage are :

First, delivery of the little deeds,

Second, existence of the debt,

Third, specified cities.

delivery means delivery of actual possession as a result of the agreement. Besides,

there must be an intention to create a security for the deposit and the deposit must besupported
by a debt. It is not necessary that all title deeds should be deposited. Thus,for a valid mortgage
by deposit of title-deeds, it is not essential to put the deed intowriting, but there must be an
intention to consider the deed as a security for the debtand if there is such intention, it is
sufficient to create a valid mortgage by deposit oftitle-deeds even if there is no deed or any
document in writing.17

Document of title- what is delivered in equitable mortgage or mortgage by deposit of title-deeds

must be a document of title. If the document deposit shows no kind of title in the depositor, no
mortgage is created. It is not necessary that the whole or even the most material of the document
of title to the property should be deposited. It is sufficient if the deeds deposited bona fide relate
to the property or are material evidence of title and are shown to have been deposited with the
intention of creating a security thereon.18

Specified cities – specified cities was originally limited to presidency town but now made
available in many cities, including Delhi, Allahabad, Kanpur, Lucknow etc.19

in Mohan Lal v. Rajasthan Industrial Corp.20 equitable mortgage transaction need to be

registered whatever amount be involved.

17
Chief controlling revenue authority v. pioneer spinners private Ltd., A.I.R. 1963 Mad. 223.
18
Supra 1, p. 437.
19
Supra 1, 438.
20
A.I.R. 2007 (NOC) 638 (Delhi).

12
ANOMALOUS MORTGAGE [sec. 58 (f)]

Such mortgage are composite mortgages formed by the combination of two or more of primary
types as in section 58. In this class of mortgage, the rights of the parties are governed by the
terms of the instrument.

Combination of simple mortgage with usufructuary mortgage-

A typical intense of combination of a simple with a usufructuary mortgage came up before the
Privy Council in Lal Narsingh Pratap v. Mohd. Yakub Khan21. In this case the mortgagor
covenanted to repay the mortgage money in 35 years. The mortgagee was to take the possession
of the property and enjoy of the usufruct in lieu of interest. Possession was not delivered and the
mortgagee sued for enforcement of the mortgage by sale of the hypotheca. If the mortgage was
purely usufructuary a suit for sale would not lie; if it was exclusively a simple mortgage, the suit
would be premature seems the mortgage money was payable only on the expression on the 35
years from the date of the mortgage. The Privy Council held that the mortgage was anomalous.
The mortgage being partly usufructuary, the mortgage-money could be regarded as having
become payable when possession was not delivered.

21
58 M.L.J. 401 (P.C.)

13
BIBLIOGRAPHY
Book referred

 G. P. Tripathi, the transfer of property act, 1882,(central law agency, Allahabad, 2018).
 S.N. Shukla, transfer of property act,( central law agency, Allahabad 2018.

sources

 www.scconline.com
 https://www.manupatrafast.in/
 http://Lawtimesjournal.in
 http://www.academia.edu
 http://www.iifl.in

14
15