Liabilities of Mortgagor and Mortgagee in Respect of mortgage

Introduction
A mortgage is the transfer of an interest in specific transfer of an interest in specific
immoveable property for the purpose of securing an existing or future debt, or the
performance of an engagement which may give rise to a pecuniary liability.

The transferor is called a mortgagor and the transferee is called a mortgagee. The principal
money and interest of which payment is secured for the time being are called the mortgage
money and the instrument by which the transfer is called a mortgage deed.1

Now it is clear to us from the definition of mortgage provided in see 58 (a) to be a mortgage
there must be a transfer of an interest. There must be specific immoveable property intended
to be mortgaged, the transfer must be made to secure the payment of a loan or to secure the
performance of a contract.

Suppose: A person fell in a situation of crying need of money, but he cannot manage it by
only means. Then he can borrow it someone by promising to repay the money and to secure
the repayment he can transfer his property as a mortgage. Here security is needed to ensure
the repayment of lend money.

Liabilities of the Mortgagor

We know that in the mortgage system the transferor is called a mortgagor and the transferee
is called mortgagee. Both the mortgagor and the mortgage have some specific liability to
success the purpose of the mortgage.

First I try to find out the liability of the mortgagor to bring a good end of the contract of
mortgage between the mortgagor and the mortgagee.

Mortgagor has some specific liability which are all grouped together in section 65 and 66 of
the TP act 1882. If we see the covenant for title heading of section 65 of TP Act 1882, it
indicate an implied contract made by the mortgagor. By this implied contract he is ready to
perform some specific liability impose upon him if there is no contract to the contrary. From
the section 65Caj of TP Act we know a liability of mortgage is that he is not permitted to
transfer that what he had not it is called covenant for title and it is similar to that of the seller
under section 55(2). If the mortgagor want to transfer something he must have interest over it.
1
Sec: 58(a) of TP Act 1882.
Without having interest in the professed property he cannot transfer that to other. The
mortgagor must have the title to transfer the property. So it is said that the mortgagee
covenants his title and his power to deal with it.

Defence of Title
Section 65(b) also impose a duty to the mortgagor and this duty is called defence of title
when a mortgagor is in possession of the mortgaged property he is bound to defend his title at
his own cost. He should try his best to protect his title against the trespasser as mortgagee is
not deprived his security. When mortgagee is in possession he is also bound to held him to
defend title by supplying expenses if mortgagor is fail to supply cost and the mortgagee pays
them out of his own pocket, then this cost is added with the mortgage money.

Public Charge
Section 65(C) impose a duty upon mortgagor to pay the public charge until he is in
possession of the mortgaged property. It is implied contract and it comes to an end with the
extinction of the right of redemption. But this duty is not terminate with the death of the
mortgagor. After his death his heir, is under a liability to pay public charges. If the mortgagor
himself purchases the land of a revenue sale, the original mortgage is not extinguished and
the liability to pay the revenue will continued.2

If the mortgagor intentionally fail to pay and property is sold for arrears of revenue and he
purchase the property. This does not terminate the mortgage rather still subject to mortgage.
If mortgagor pay public charge he cannot claim against mortgagee as he spent it for his own
benefit.

Payment of Rent
Section 65(d) deals with the liability of the mortgagor in leasehold property. The mortgagor
has a implied contract to pay rents and to perform conditions of lease until the time of the
mortgage if the mortgage property is leasehold. This covenant run with the mortgagor as long
as the mortgagee is not in the possession, when mortgagee takes possession he is bound to
pays rent, the liability of the mortgagor here extinguished upon the taking possession by the
mortgagee.

Prior Mortgages

2
Bal Krishna vs. Vishwanath (1895) 19 Bom 528.
Section 65(e) deals another liability of the mortgagor. There is an implied covenant that the
mortgagor is bound to discharge all the prior mortgage debt for the purpose so that the
subsequent mortgagee is not deprived. If the mortgagee deprived for the non-performance of
this duty by the mortgagor he can sue for mortgage money under section 68.

Liability for waste

Section 66 of the TP Act 1882 impose a duty upon the mortgagor not to commit any act
which diminish the value of the property and so impair the security. He is not liable for allow
to destroy of the property/ he is not liable if he is not protect the property from destruction.
He is only liable when his act destroy the property. If his act is injurious to the mortgage
property and if the security become insufficient by his act he is liable.

When a mortgagor is in possession he is never liable to account for rent and profits received
by him and may do all such acts as are referable to his qualified ownership and which are
consistence with the maintenance of sufficient security for the mortgagee.

Liabilities of mortgagee
Like the mortgagor, in the system of mortgage the mortgagee has also some duty or liability.
The liabilities of the mortgagee are deals in section 76 of the TP Act 1882. These liabilities
arise only when the mortgagee enters into possession. These liabilities are classified under
nine heads. They are following:

1) Management: If the mortgagee takes possession of the property he is bound to act as a

prudent owner in the management of the property. A mortgagee who is in the possession
he is bound to cultivate ordinary crops that the land is capable of yielding. A mortgagee
can make a lease but not extending the term of mortgage. 3 The lease extinguished on the
redemption of mortgage. So a mortgagee has a liability to manage the mortgage property
as it is his own property.

2) Collection of Rents and Profits: The second duty of the mortgagee in possession is that
he must use his best endeavors to collect the rents and profits. If he fails to collect highest
rent it show that he cannot manage the property. He should try is best to collect highest
rent as this rent is deduct against his principle money. If he appoint an agent to collect
rents and profits he is liable for grass negligence by agent.
3
Mahabir vs. Haribans (1952) S.C.R 775 (1952) S.CJ 292.
3) Payment of Revenue: The mortgagor is liable to pay be government revenue to save the
property begin sold for areas. But this duty transfer to mortgagee when he takes the
possession of the property. He is bound to pay revenue from the income of the property. If
he pays revenue from his pocket he is entitle to add the money in mortgage.

4) Repairs: Mortgagor has a duty to repair the mortgage property if there is any surplus
after deducting the revenue and public charge and the interest of the principle money. If
there is no surplus the liability for effecting repair does not arise, the liability is subject to
contract to the contrary between the parties.

5) Waste: Like the Mortgagor under section 66 and leasee under section 108, the mortgagee
has a duty not to commit any act that is harmful for the property. He cannot permitted to
cut down the trees of the land which was already existed but he has right to do that as he
planted them.

6) Insurance: He has the Duty to make insurance of the property and to use the receiving
insurance money in reinstating the property or reduct or discharge of the mortgage money
according the direction of mortgagor.

7) Accounts: The mortgagee in possession is bound to keep clear fall and accurate accounts
supported by vouchers. The question of account is not arise if there is a contract that the
income is taken in lieu of the interest and principle money.

8) Deposit: After tendering mortgage money to the mortgagee or deposited in the court, the
mortgagee must account for his receipts from the mortgaged property from the date of the
tender. He has no right to deduct any amount as an expenses incurred after such date in
connection with the mortgaged property.

9) Failure to perform any of the duties: Mortgagee is bound to perform all the duties
imposed on him. He is liable for loss if occur for the lack of his prudency. If the
mortgagee fails to pay the public charges and the mortgagor pays to avert a sale, the
mortgagor is entitled to credit for the amount.