PROJECT

SUBJЕCT : Property Law II

TOPIC: Rights and liabilities of a Mortgagee

Submitted To : Submitted By :
Mr. Vipul Vinod Aditi Jaiswal
Assistant Professor (Law) Semester VI, B.A. L.L.B.(H)
Dr. RMLNLU, Lucknow Enrollment No.-160101007

ACKNOWLEDGEMENT
I express my gratitude and deep regards to my teacher Mr. Vipul Vinod for giving me such a
challenging topic and also for his exemplary guidance, monitoring and constant
encouragement throughout the course of this thesis.

I also take this opportunity to express a deep sense of gratitude to my seniors in the college
for their cordial support, valuable information and guidance, which helped me in completing
this task through various stages.

I am obliged to the staff members of the Madhu Limaye Library, for the timely and valuable
information provided by them in their respective fields. I am grateful for their cooperation
during the period of my assignment.

Lastly, I thank almighty, my family and friends for their constant encouragement without
which this assignment would not have been possible.

ADITI JAISWAL

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 TABLE OF CONTENTS

INTRODUCTION......................................................................................................................4

MORTGAGE: THE DEVELOPMENT OF LAW.....................................................................6

MORTGAGE: WHAT IS IT......................................................................................................8

RIGHTS OF A MORTGAGEE...............................................................................................10

LIABILITIES OF A MORTGAGEE.......................................................................................17

CONCLUSION........................................................................................................................21

BIBLIOGRAPHY....................................................................................................................23

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 INTRODUCTION

“Worm or beetle- drought or tempest- on a farmer’s land may fall. Each is loaded full o’

ruin, but a mortgage beats ‘em all.”

-Will Carleton

A mortgage involves the transfer of an interest in land as security for a loan or other

obligation.1 It is the most common method of financing real estate transactions.2 The

mortgagor is the party transferring the interest in land.3 The mortgagee, usually a financial

institution, is the provider of the loan or other interest given in exchange for the security

interest.4

The term “mortgage” is a term derived into the English Law and subsequently into the Indian

Law from the French Law. The term, in French, post translation means “death pledge”. 5 It

means that it comes to an end only when either the obligation of the mortgagor is completed

or the property is taken by the mortgagee through the process of foreclosure.6 In the ancient

system of laws, a mortgage was really a pledge- the property being a gage which was forfeited

on default of payment.7 The transaction was effected either by delivery of possession, or by

conditional conveyance.8

1
Definition availed from the open website of Cornell Law University; available at <
http://www.law.cornell.edu/wex/mortgage>; last seen on 3rd March, 2014.
2
Ibid.
3
Ibid.
4
Ibid.
5
Ibid.
6
Ibid.
7
Mulla, The Transfer of Property Act, LexisNexis Butterworths Wadhwa, Nagpur, (10th Ed., 2006), pp. 551.

8
Ibid.

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Justice Mahmood in Gopal v. Parsotam9 has borrowed the classic definition of mortgage from

Macpherson’s Law of Mortgages10, stating that, “Mortgage as understood by this country

cannot be defined better than by the definition adopted by the Legislature in s 58 of the

Transfer of Property Act, 1882. That definition has not in any way altered the law, but, on the

contrary, has only formulated in clear language the notions of mortgage as understood by all

the writers of textbooks on Indian mortgages. Every word of the definition is borne out by the

decision of the Indian Courts of Justice.”11

The author in the present paper will not attempt to do anything revolutionarily new in terms of

the definition, and scope of mortgage, the rights and liabilities of a mortgagee, etc. The author

shall merely, in a concise, precise and easy-to-understand manner, present in a nutshell the

definition and scope of mortgage, along with the development of the law on mortgage as well

as the rights and liabilities of a mortgagee. The object of the author, through the medium of

this research paper, is not a new, groundbreaking research (which is not really possible in this

area of law as it is already very precise and has been analysed a lot over the last 100 years).

Rather, it is to bring together, at one place, all the contents and opinions and interpretations

of various authors, scholars and judges (through their judgments) about the definition of the

term mortgage, the rights and liabilities of a mortgagee as understood by the legal-sphere.

MORTGAGE: THE DEVELOPMENT OF THE LAW

9
(1883) ILR 5 All 121.

Macpherson, Law of Mortgages, 6th Ed, pp. 10 (As seen from Mulla, The Transfer of Property Act, LexisNexis
10

Butterworths Wadhwa, Nagpur, (10th Ed., 2006), pp. 552.

11
Mulla, The Transfer of Property Act, LexisNexis Butterworths Wadhwa, Nagpur, (10th Ed., 2006), pp. 552.

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In Roman law, the earliest type of security was the fiducia, a conditional conveyance under

which the property whatever its value, was forfeited in the case of non-payment. 12 This was

followed by the pignus which was a transfer not of ownership, but of possession without

liability to forfeiture.13 Then the last stage was the hypotheca, a form of pledge without

delivery of possession under which the creditor acquired a power of sale.14

In the Hindu and Mahomedan laws, mortgages underwent an almost similar process of stages

of evolution. A mortgage by conditional sale was a very early form of mortgage among

Hindus. The usufructuary mortgage with neither power of sale, nor of foreclosure

corresponded to the Roman pignus, and the simple mortgage was a later development

corresponding to the Roman hypotheca.15

Among Mahomedans, the mortgage by conditional sale was a device to evade the Islamic

prohibition of interest.16 This was the bye-fil-wafa, literally a sale with a promise, so that the

mortgagee enjoyed the rents and profits in lieu of interest and became absolute owner of the

property if the debt was not paid. 17 However, the earliest known form of Mahomedan security

was the rahn or pledge with possession corresponding to the Roman pignus.18

In England, it seems certain that the original mortgage at common law was rather a pledge

than a mortgage.19 The transfer was not of title, but of possession. When the creditor took the

profits in discharge of both principal and interest, the transaction was said to be a vivum

12
Mulla, The Transfer of Property Act, LexisNexis Butterworths Wadhwa, Nagpur, (10th Ed., 2006), pp. 551.
13
Ibid.
14
Ibid.
15
Ibid.
16
Ibid.
17
Ibid.
18
Ibid.
19
Ibid.

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vadium or living pledge since it worked out its own redemption. 20 When the creditor took the

profits merely in satisfaction of interest, it was called a mortuum vadium or a dead pledge.21

This form of mortgage is similar to the usufractuary mortgage of the Transfer of Property

Act, 1882 (TOPA). At a slightly later time, the English mortgage took the modern form of a

conditional conveyance.22 The condition was originally one of defeasance, that on repayment,

the grant determined and the land reverted to the mortgagor who was entitled to re-enter. 23

Subsequently, the condition became one of reconveyance on repayment as defined in clause

24
(e) of Section 58 of the Transfer of Property Act, 1882. After the common law, mortgage

became a mortgage by conditional conveyance, and was modified by three principle of

equity.25 These three modifying principles are:-

1. That equity looks to the essence of the transaction, and that a mortgage is in essence a
borrowing transaction;
2. That the borrower is in need of protection, and that a condition that penalizes him is
void;
3. That a condition of forfeiture in default of payment on the due date is a penalty.26
These same equitable principles, in their complete form and structure, have been applied in

India by the Indian courts as well.27

MORTGAGE: WHAT IS IT?

20
Ibid.
21
Ibid.
22
Ibid.
23
Ibid.
24
Ibid.
25
Ibid.
26
Ibid.

27
Ibid.

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

repayment of a debt.28 However, such interest itself is immovable property. 29 The nature of

the right transferred depends upon the type of mortgage. In a simple mortgage, what is

transferred is a power of sale, which is one of the component rights that make up the

aggregate of ownership.30 In a usufructuary mortgage, on the other hand, what is transferred

is a right of possession and enjoyment of the usufruct. 31 In a conditional mortgage and in an

English mortgage, the right transferred is, in form, a transfer of a right of ownership subject

to a condition.32 However, in each case, whatever may be the form of mortgage, there is a

transfer of some interest only, and not a transfer of the whole interest of the mortgagor.33

The distinguishing feature of a mortgage is that the right in the property created by the
34
transfer is accessory to the right to recover the debt. The debt sustains in a mortgage, while

a transaction by which, a debt is extinguished is not a mortgage, but a sale. In the landmark

case of Nidha Shah v Murli Dhar35, the deed was purported to be a deed of mortgage with

possession of certain villages for a period of 14 years. The deed provided that at the expiry of

the term, the mortgagors were to come into possession of the mortgaged villages without
28
Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of Property Act, LexisNexis
Butterworths Wadhwa, Nagpur, (11th Ed., 2013), pp. 442; Also see Madan Lal Sobti v. Rajasthan State
Industrial Development & Investment Corporation, AIR 2007 (NOC) 638
(Del).

Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of Property Act, LexisNexis
29

Butterworths Wadhwa, Nagpur, (11th Ed., 2013), pp. 442; Also see Ali Husain v. Nilla Kanden, (1864) 1 Mad
HC 356.

Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of Property Act, LexisNexis
30

Butterworths Wadhwa, Nagpur, (11th Ed., 2013), pp. 442

31
Prahlad v Maganlal, (1952) ILR Bom 1090.

Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of Property Act, LexisNexis
32

Butterworths Wadhwa, Nagpur, (11th Ed., 2013), pp. 442

33
Ibid.

34
Rajkumari Kaushalya Devi v. Bawa Pritam Singh, [1960] 3 SCR 570.

35
(1903) ILR 25 All 115, 30 IC 54.

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settlement of accounts, and that the mortgagee should then have no power whatsoever in

respect of the said estate, but should return the mortgage deed to the mortgagors without their

repaying the mortgage money. The mortgagee refused to return such villages as he had, on

the ground that he had not received the full number of villages, and had not been able to

recoup himself. The Privy Council said that the deed was not a security for the payment of

any money and that the transaction was not a mortgage but a grant of land for a fixed term

free of rent and that, as the suit was not on contract but on title, the so-called mortgagors were

entitled to recover possession.36

Thus, we can conclusively wrap up that mortgage is, simply put, a conveyance of title to

property that is given as security for the payment of a debt or the performance of a duty and

that will become void upon payment or performance according to the stipulated terms.37

RIGHTS OF A MORTGAGEE

In the present paper, we shall solely deal with the rights of a mortgagee in the context of the

Transfer of Property Act, 1882. The author shall not delve into a compara-tive analysis by

providing the provisions for rights of mortgagee in legal system of other countries.

Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of Property Act, LexisNexis
36

Butterworths Wadhwa, Nagpur, (11th Ed., 2013), pp. 442, 443.

37
Bryan A Garner, Black’s Law Dictionary, Thomson West, (8th Ed., 2004).

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Sections 67 to 77 deal with the rights and liabilities of the mortgagee, just as Sections 60 to

66 have dealt with the rights and liabilities of the mortgagor. Sections 67, and 68 to 73 refer

to the mortgagee’s rights and ss 67A, 76 and 77 refer to the mortgagee’s liabilities.

1. Section 67. Right to foreclosure or sale.

Section 67 is the counterpart of s. 60, and essentially gives the mortgagee a right to

foreclosure or sale in default of redemption by the mortgagor.38 If the mortgagor has

paid or deposited the mortgage-money, there is no occasion for the exercise of the

right of foreclosure or sale.39 Similarly, if a decree for redemption is made, a suit for

foreclosure or sale would be barred, especially as a redemption decree itself provides

for sale or foreclosure in default of payment.40

It is never open to the mortgagee to question the title of the mortgagor. In Tasker v.

Small, Lord Cottenham had observed that, “To him (mortgagee) it is immaterial, upon

repayment of the money, whether the mortgagor’s title was good or +bad. He is not

at liberty to dispute it any more than a tenant is at liberty to dispute the landlord’s

title.”41

A mortgagee has essentially three remedies by suit, namely,42

(a). On the covenant- This remedy is available only if the mortgage imports a

personal liability, express or implied.

Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of Property Act, LexisNexis
38

Butterworths Wadhwa, Nagpur, (11th Ed., 2013), pp. 575.

39
Ibid.

40
Ibid.

41
Ibid.

42
Ibid at pp. 576.

10 | P a g e
 (b).For sale- The suit for sale of the security is a statutory remedy, and avoids the

hardships of the forfeiture of a security which may exceed in value the

mortgage debt.

(c). For foreclosure- Foreclosure is essentially a legal term which implies that the

relief given by equity against the forfeiture of the security is withdrawn. The

effect is that the conditional conveyance becomes absolute, and the property

vests absolutely in the mortgagee.43

2. Section 68. Right to sue for mortgage money.

This section refers to the personal remedy of the mortgagee, while s. 67 refers to the

remedy against the property mortgaged.44 This section essentially embraces two

distinct classes of suit. The cause of action in a suit under clause (a) is different from

the cause of action in a suit under clauses (b), (c) or (d). The suit under clause (a) is a

suit to enforce the personal covenant expressed or implied in the mortgage; but the

suit under clauses (b), (c) or (d) is in the nature of a suit for compensation when the

mortgage is deprived of his security.45 The causes of action being different, there

exists a difference in the periods of limitation. There, furthermore, exists a distinction

as to interest. In cases under clause (a), the interest is at the contractual rate, and the

interest which may be decreed is determined under o 34, r 11 of the Code of Civil

Procedure.46 In cases under all the other clauses, the suit being for compensation,

interest is by way of damages and the rate is in the discretion of the court.47

43
Ibid.

Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of Property Act, LexisNexis
44

Butterworths Wadhwa, Nagpur, (11th Ed., 2013), pp. 590; Also see Bhikkam Lal v. Janki Dulari, 171 IC 296
Oudh 517.
45
Ibid at pp. 590, 591.

46
Ibid at pp. 591.

47
Ibid; Also see Rudra Prasad v. Nasiruddin. AIR 1927 Oudh 315.

11 | P a g e
 The provisions of this section are designed for the purpose of indemnifying the

mortgage against any disturbance in the peaceful enjoyment of the property. The

provisions are of an enabling nature, and do not preclude the mortgagee from suing a

trespasser who has possession.48

3. Section 69. Power of sale when valid.

The power of sale in clauses (b) and (c) must be expressed. A provision in mortgage

deed that the mortgagee should ‘have all the rights, powers, remedies and privileges

conferred upon a mortgagee by Act 4 of 1882’ does not confer an express power of

sale under this section.49

The power of sale referred to in this section is a power of sale without the intervention

of the court, and is distinct from the power of a simple mortgagee to cause the

mortgaged property to be sold, i.e., under s. 67, by decree of the court. 50 It refers to a

clause expressly included in the mortgage. A power of sale without the intervention of

the court does not affect the mortgagee’s ordinary right of realization by suit. 51 The

right recognized by this section is independent of the right to have a receiver

appointed under s 69-A, and may be exercised even after a receiver has been

appointed under s 69-A.52

4. Section 69-A. Appointment of receiver.

The provisions of this section cover a case in which it is alleged by the mortgagor that

there is no debt outstanding or that the mortgage has become time-barred and

48
Ibid; Also see A Kumar v. Sanjoga, (1953) 32 ILR Pat 903.

49
Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of Property Act, LexisNexis
Butterworths Wadhwa, Nagpur, (11th Ed., 2013), pp. 606; Also see Mataprasad Upadhya v. Kunnon Devi, AIR
1928 Rang 128.
50
Ibid; Also see Kishan Lal v. Ganga Ram, (1891) ILR 13 All 28.

51
Ibid at pp. 607; Also see Goburdhun Bysack v. Sonattum, (1874) 23 WR 84.

52
Ibid; Also see Krishnammal v. N Krishna, AIR 1956 Mad 424.

12 | P a g e
 thereupon, there should be no receiver. 53 A mortgagee in possession is responsible for

prudent management, and is liable to be called to account on the footing of wilful

default.54 To avoid this liability and at the same time to preserve the advantages of

possession, the practice grew in England at first to provide for the appointment of a

receiver by the mortgagor, and then for the deed to provide for the appointment of a

receiver by the mortgagee on behalf of the mortgagor, so that the receiver was the

agent of the mortgagor.55

The mortgagee cannot appoint a receiver until the power of sale is exercisable under s

69(2). In the case of default of payment of principal, the mortgagee would, therefore,

have to wait until expiry of three months after service of notice. The power conferred

by this section may be exercised even after the mortgagee has gone into possession. 56

A receiver is not generally appointed by the court under such a clause in the mortgage

decree after the final decree has been made.57

The power conferred under this section is independent of the power of sale recognized

under s 69; and the latter may be exercised even though a receiver has been appointed

under this section.58 Accordingly, a receiver appointed under this section may be

removed for due cause.59

5. Section 70. Accession to mortgaged property.

53
Ibid at pp. 616; Also see Venkatnarayan v. Champalal, AIR 1954 Mad 896.

54
Ibid; Also see Mayor v. Murray, (1878) 8 Ch D 424.

55
Ibid; Also see Gaskell v Gosling, (1896) 1 QB 669.

56
Ibid at pp. 617; Also see Refuge Assurance Co v. Pearlberg, (1938) Ch 687.

57
Ibid.

58
Ibid; Also see Krishnammal v N Krishna, AIR 1956 Mad 424.

59
Ibid.

13 | P a g e
 Section 70 refers to the mortgagee’s right to accessions to the mortgaged property and

is, therefore, the converse of s 63 which deals with the mortgagor’s rights to

accessions. As regards natural accessions, it is a corollary to s 63, for such accession

is incorporated in the mortgaged property, from part of the mortgagee’s security, and

reverts to the mortgagor upon redemption.60 With regards acquired accessions, the

mortgagor is not always bound to incur the expense of redeeming them if they have

been acquired by the mortgagee. However, no such distinction is required in regards

to the mortgagee’s rights, for the mortgagee is entitled to treat acquired accessions as

part of his security and to enforce his lien upon them, if they have been acquired by

the mortgagor, and a fortiori if they have been acquired by himself. 61 Thus, if a

mortgagor builds on the property mortgaged, the buildings form a part of the

mortgagee’s security.62

6. Section 71. Renewal of mortgaged lease.

It must be, at the very outset, pointed out that the original section, which was

amended in 1929, referred to a lease for a term of years. The words ‘for a term of

years’ have now been omitted.

Section 71 is a direct corollary of s 64, for just as the mortgagor has on redemption a

right to a renewed lease obtained by the mortgagee, so the mortgagee is entitled to a

renewed lease obtained by the mortgagor, as it is an increment to his security.63 This is

based on the principle that the new lease is treated as engrafted on the stock of the old

lease, and forming part of the mortgage security.64

60
Ibid at pp. 620.

61
Ibid.

62
Ibid; Also see Krishna Gopal v Miller, (1902) ILR 29 Cal 803.

63
Ibid at pp. 622.

64
Ibid.

14 | P a g e
 7. Section 72. Rights of mortgagee in possession.

This section represents to a large extent the English rule that the mortgagee is entitled

to be indemnified against all expenses, so long as he acts reasonably as a mortgagee,

and is allowed all proper ‘costs, charges and expenses’ incurred by him in relation to

the mortgage security.65 The costs must be costs which the mortgagee has incurred as

mortgagee. Such costs form the entire decretal amount,66 and are the costs, charges

and expenses referred to in o 34, r 2(1)(a)(iii) of the Code of Civil Procedure. 67 Costs

incurred by a mortgagee after a proper tender of the mortgage money have been

disallowed.68

Under the English law, the costs of negotiating the loan and preparing the mortgage

are costs leading up to the mortgage, and not costs incurred qua mortgage. Hence,

though the mortgagor may be personally liable for these costs, they cannot be added

to the security and recovered as costs, charges and expenses. This would also be the

law under s 72 which refers to money spent by a mortgagee as a mortgagee. Any

liability under this section cannot be enforced after the mortgage has been

surrendered. Thus, if the mortgagee accepts money paid into court by the mortgagor

under s 83 and gives up possession, he cannot bring the property to sale in order to

recover expenses.69 However, the mortgagee continues to be a mortgagee after the suit

and until a final decree for foreclosure is passed, or a sale under a decree for sale is

Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of Property Act, LexisNexis
65

Butterworths Wadhwa, Nagpur, (11th Ed., 2013), pp. 624.

66
Maharaj Bahadur Singh v Basiruddin, AIR 1925 Cal 1135.

67
Ibid n 64.

68
Ibid; Also see Dhondo v Balakrishna, (1884) ILR 8 Bom 190.

69
Ibid; Also se Anadi Ram v Dur Najaf Ali, (1891) ILR 13 All 195.

15 | P a g e
 confirmed, and it is submitted that a mortgagee can incur necessary expenses under

this section after suit, and until final decree for foreclosure or confirmation of sale.70

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

This section is an instance of the application of the doctrine of substituted security,

viz that the mortgagee is, for the purpose of his security, entitled not only to the

mortgaged property, but also to anything that is substituted for it.71

The sale referred to in this section must be a sale free from encumbrances, ie, a sale

which has the effect of nullifying the mortgage.72 This must be so, for if the sale does

not extinguish the mortgage, the mortgagee can enforce his lien against the property

in the hands of the auction purchaser.73 Furthermore, even if the mortgage is executed

after default in payment of revenue, the mortgage has a right to payment out of

surplus sale proceeds.

LIABILITIES OF A MORTGAGEE

As the author has stated previously also, he shall be discussing the liabilities of a mortgagee

only in the context of the Transfer of Property Act, 1882. Sections 67A, 76 and 77 deal with

the liabilities of mortgagee under the Indian law.

1. Section 67A. Mortgagee when bound to bring one suit on several mortgages.
70
Ibid at pp. 624, 625.

71
Ibid at pp. 630.

72
Ibid at pp. 631.

73
Ibid; Also see Prem Chand Pal v Purnima Dasi, (1888) ILR 15 Cal 546.

16 | P a g e
 This section of the Transfer of Property Act, 1882 was inserted by the amending act

20 of 1929. This section is essentially the counterpart of s. 61, which deals with the

mortgagor’s right of redemption. The principle of consolidation is abolished by

section 61 as regards mortgagors, and a mortgagor who has given different mortgages

on different properties or successive mortgages of the same property is entitled to

redeem each mortgage separately.74 However, the principle of consolidation which is

abolished as regards the mortgagor is applied by this section to the mortgagee.75 If the

mortgagee holds different mortgages of different properties or successive mortgages

of the same property from the same mortgagor, he must enforce all or none, unless

there is a contract to the contrary.76

Although there have been conflicting views, the general trend has been that a

mortgagee might sue on a later mortgage reserving his rights on a prior mortgage.

This was decided by the Full bench of the Madras High Court in Subramania v.

Balasubramania77, which adopted the view taken by the Allahabad HC in Sundar

Singh v. Bholu78 that two mortgages constituted different causes of action.79

This section is primarily for the benefit of the mortgagor, and he may waive its

benefit, and such a waiver would be implied by his failure to object in good time. 80

However, this rule does not apply, unless and until the mortgagor were the same.81
Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of Property Act, LexisNexis
74

Butterworths Wadhwa, Nagpur, (11th Ed., 2013), pp. 587.

75
Ibid.

76
Ibid.

77
(1915) ILR 38 Mad 927.

78
(1898) ILR 20 All 322.

Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of Property Act, LexisNexis
79

Butterworths Wadhwa, Nagpur, (11th Ed., 2013), pp. 587.

80
Ibid at pp. 588.

81
Naidu SR v. Bank of Karaikudi, AIR 1971 SC 884.

17 | P a g e
 2. Section 76. Liabilities of mortgagee in possession.

This section enacts the statutory duties of a usufructuary mortgagee, or of a mortgagee

in possession.82 Section 76 is not applicable unless the mortgagee is in possession qua

mortgagee. Even if a mortgage deed entitles a mortgagee to take possession, collect

rents and profits, his liability to account for such rents and profits will not arise,

unless and until he has taken such possession. 83 A mortgagee is not in possession qua

mortgagee if he enters the property as lessee. 84 In some cases, the mortgagee is both a

lessee and a mortgagee, and then it is a matter of construction whether the

transactions of mortgage and lease are separable. If they are separable, the mortgagee

is possession as lessee and is not liable to account under this section.

A mortgagee generally enters into possession qua mortgagee in the case of a

usufructuary mortgage or an English mortgage.85 However, a mortgagee may take

possession qua mortgagee even when the deed is silent as to possession. This may

arise where a mortgagee is in possession under a foreclosure decree; 86 or under the

provisions of a debenture trust-deed when the trustees take over the management of a

company;87 or in any other case when the possession is relatable to the mortgage. 88

Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of Property Act, LexisNexis
82

Butterworths Wadhwa, Nagpur, (11th Ed., 2013), pp. 637; Also see Kamalapat v Union Sugar Mills, AIR 1929
PC 256.
83
Ibid; Also see Sivraj Lal v HPF Ltd, AIR 1943 Mad 62.

84
Ibid; Also see Page v Linwood, (1837) 4 Cl & Fin 399.

Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of Property Act, LexisNexis
85

Butterworths Wadhwa, Nagpur, (11th Ed., 2013), pp. 638.

86
Suratsingh v Nomanbhai, AIR 1961 Bom 43.

87
LV Apte v RGN Price, AIR 1962 AP 274.

88
Upendra Nath v Tara Nath, AIR 1962 Assam 52.

18 | P a g e
 However, this section has no application whatsoever where the possession is unrelated

to the mortgage.89

3. Section 77. Receipts in lieu of interest.

Section 77 essentially enacts an exception to s 76. It omits reference to clause (c) of s

76, which makes it obligatory on the mortgagee to pay government revenue.90 There is

no account to be taken between the mortgagor and mortgagee when the rents and

profits are taken in lieu of interest, or in lieu of interest and defined portions of the

principal.91 In such cases, if the mortgagee does not realise the full value of the

ususfruct, it is the mortgagee and not the mortgagor who suffers.

Whether this section excludes the operation of all clauses (b), (d), (g) and (h) of s 76

depends on the construction of the document. No such exclusion takes place where

the document provides that the mortgagee is entitled to a fixed sum in lieu of interest,

or where the deed provides that the mortgagee would be entitled to interest if he is

unable to obtain receipts.92

Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of Property Act, LexisNexis
89

Butterworths Wadhwa, Nagpur, (11th Ed., 2013), pp. 638.

90
Ibid at pp. 655.

91
Ibid; Also see Bachu Lal v Chaudhri Syed Mohammed, AIR 1933 PC 136.

92
Ibid; Also see Manikchand v Mohammed Sait, (1969) 1 SCC 206.

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 CONCLUSION

“The future that i will not live to see is the one my children will live in. That’s my

immortality. And i shouldn’t try to mortgage theirs for my benefit.”

- Justin Cronin

In the view of the author, after having read and gone through numerous books, the rights and

liabilities of a mortgagee, especially in Indian context, are provided for completely within the

Transfer of Property Act, 1882 and hence do not need any jurisprudential development.

The understanding of the jurisprudence behind the concept of rights and duties simpliciter, is

of utmost significance in any and all subjects even minutely dealing with, containing or

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relating to the general concept of rights and duties. Thus, in the opinion of the author, just

reading books by scholars and various other authorities on the law of mortgages is not

sufficient. The person must understand the jurisprudence behind the concept of rights and

duties and then accordingly understand their application in the law of mortgages.

A mortgage is as valuable to a mortgagee as it is to a mortgagor. Obviously, the main benefit

is that a rate of interest can be charged for the money lent, and an income is generated for the

mortgagee on the security of what is, in all but the most severe economic conditions, an asset

that is going to appreciate in value. However, just as the property owner uses the mortgage to

liquidate his assets, the mortgagee uses the mortgage to capitalise his income. The inherent

characteristic of a mortgage is that it is security for money lent, and the ultimate goal of any

mortgagee will be to recover payment of the principal debt, plus interest and related costs.

This is why and where the rights and the liabilities of a mortgagee come into play, for the

benefit of all the parties in the long run. An existing knowledge about what are the right

liabilities of a mortgagee, how they apply to various situations, and when they apply are all

specifics which each mortgagor and mortgagee should have. This will be valuable in helping

and aiding the mortgagor to return the amount plus interest, as well as the mortgagee to

ensure the return of the same.

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 BIBLIOGRAPHY

Indian Cases

1. A Kumar v. Sanjoga, (1953) 32 ILR Pat 903.

2. Ali Husain v. Nilla Kanden, (1864) 1 Mad HC 356.
3. Anadi Ram v Dur Najaf Ali, (1891) ILR 13 All 195.
4. Bachu Lal v Chaudhri Syed Mohammed, AIR 1933 PC 136.
5. Bhikkam Lal v. Janki Dulari, 171 IC 296 Oudh 517.
6. Dhondo v Balakrishna, (1884) ILR 8 Bom 190.
7. Goburdhun Bysack v. Sonattum, (1874) 23 WR 84.
8. Gopal v. Parsotam, (1883) ILR 5 All 121.
9. Kamalapat v Union Sugar Mills, AIR 1929 PC 256.
10. Kishan Lal v. Ganga Ram, (1891) ILR 13 All 28.

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 11. Krishna Gopal v Miller, (1902) ILR 29 Cal 803.
12. Krishnammal v N Krishna, AIR 1956 Mad 424.
13. LV Apte v RGN Price, AIR 1962 AP 274.
14. Madan Lal Sobti v. Rajasthan State Industrial Development & Investment
Corporation, AIR 2007 (NOC) 638. (Del).
15. Maharaj Bahadur Singh v Basiruddin, AIR 1925 Cal 1135.
16. Manikchand v Mohammed Sait, (1969) 1 SCC 206.
17. Mataprasad Upadhya v. Kunnon Devi, AIR 1928 Rang 128.
18. Naidu SR v. Bank of Karaikudi, AIR 1971 SC 884.
19. Nidha Shah v Murli Dhar, (1903) ILR 25 All 115, 30 IC 54.
20. Prahlad v Maganlal, (1952) ILR Bom 1090.
21. Prem Chand Pal v Purnima Dasi, (1888) ILR 15 Cal 546.
22. Rajkumari Kaushalya Devi v. Bawa Pritam Singh, [1960] 3 SCR 570.
23. Rudra Prasad v. Nasiruddin. AIR 1927 Oudh 315.
24. Sivraj Lal v HPF Ltd, AIR 1943 Mad 62.
25. Subramania v. Balasubramania, (1915) ILR 38 Mad 927.
26. Sundar Singh v. Bholu, (1898) ILR 20 All 322.
27. Suratsingh v Nomanbhai, AIR 1961 Bom 43.
28. Umartara Gupta v Umacharan Sen, (1906) 3 Cal LJ 52.
29. Upendra Nath v Tara Nath, AIR 1962 Assam 52.
30. Venkatnarayanv. Champalal, AIR 1954 Mad 896.

English Cases

1. Gaskell v Gosling, (1896) 1 QB 669.

2. Mayor v. Murray, (1878) 8 Ch D 424.
3. Page v Linwood, (1837) 4 Cl & Fin 399.

Books and Treatises

1. Bryan A Garner, Black’s Law Dictionary, Thomson West, (8th Ed., 2004).
2. Mulla, The Transfer of Property Act, LexisNexis Butterworths Wadhwa, Nagpur,
(10th Ed., 2006).
3. Sir Dinshaw Fardunji Mulla, Dr Poonam Pradhan Saxena, Mulla The Transfer of
Property Act, LexisNexis Butterworths Wadhwa, Nagpur, (11th Ed., 2013).

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Hyperlinks

1. http://www.law.cornell.edu/wex/mortgage
2. www.heinonline.com (used en passant)
3. www.jstor.com (used en passant)
4. www.manupatra.com (used en passant)

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