INTEGRAL UNIVERSITY

Assignment of Transfer of Property Act on

Mortgage in India: An Analysis

Submitted By: Submitted To:

Himadri Goswami Dr. Mirza Junaid Beg sir

B.B.A LL.B 5th semester

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Acknowledgement
I would like to thank my gratitude towards my teacher ‘Dr. Mirza Junaid Beg Sir’
who gave me this golden opportunity for making this assignment on the topic of
‘Mortgage in India- An Analysis’ which made me to a lot of research regading
completion of this assignment which enhances my knowledge towards it.

Thanking You.

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Index

Headings Page no.

Introduction 4
Section 58 5
Amendment 6
Rights of mortgagor 7
Liabilities of mortgagor 8
Rights of mortgagee 8
Liabilities of mortgagee 9
conclusion 10
Bibliography 11

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Introduction
Mortgages as understood in India cannot be defined better than as it is in Section
58. The definition does not alter the law but on the contrary, the definition
formulates the notion of the mortgage as understood by text writers and every word
is borne out by the decisions of the Courts. The chapter starts with definition and 6
kinds of mortgages and of charge. Rights include redemptions and liabilities of the
mortgagor are sec. 59-66 and 951.

Mortgage is the transfer of an interest in specific immovable property for the

purpose of securing the payment of money advanced or to be advanced by way of
loan, an existing/ future debt or the performances of an engagement which may
give rise to pecuniary liability. The transferor is called mortgagor, transferee is
called mortgagee, the principle money and interest is called mortgage money and
instrument is called mortgage deed (S. 58).

Where principle money secured is one hundred rupees or upwards, a mortgage can
be affected only by a registered instrument signed by mortgagor and attested by at
least two witnesses (S. 59).

Mortgage is a common but ambiguous term in today's loan oriented society. The
popular term mortgage carries with it various vague ideas .We the common people
know that we need to mortgage our property in order to get loans such as house
building loans, car loans, and educational loans and so on.

Generally speaking when a person wishes to buy some movable or immovable

property for which he is in need of money, then he can take loan mortgaging his
movable or immovable property. In case of mortgage the banks or financial
institutions give loan by securing the repayment of the loan with the interest in a
specific movable and/or immovable property transferred by the person who has
taken the loan. Mortgage works as a security of the loan amount. It is way to
secure profit for the bank and/ financial institutions and it is the way of getting
loans for the common people, builder and/or company, firm etc.

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Dr. G.P. Tripathi, The Transfer of Property Act 399, ( Central Law Publications, Allahabad, 19th edition)

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Section 58 in The Transfer of Property Act, 1882
58. “Mortgage”, “mortgagor”, “mortgagee”, “mortgage-money” and
“mortgage-deed” defined2.—

(a) A mortgage is the transfer of an interest in specific immoveable property for the
purpose of securing the payment of money advanced or to be advanced by way of
loan, 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, the
transferee a mortgagee; the principal money and interest of which payment is
secured for the time being are called the mortgage-money, and the instrument (if
any) by which the transfer is effected is called a mortgage-deed.

(b) Simple mortgage.—Where, without delivering possession of the mortgaged

property, the mortgagor binds himself personally to pay the mortgage-money, and
agrees, expressly or impliedly, that, in the event of his failing to pay according to
his contract, the mortgagee shall have a right to cause the mortgaged property to be
sold and the proceeds of sale to be applied, so far as may be necessary, in payment
of the mortgage-money, the transaction is called a simple mortgage and the
mortgagee a simple mortgagee.

(c) Mortgage by conditional sale.—Where, the mortgagor ostensibly sells the

mortgaged property— on condition that on default of payment of the mortgage-
money on a certain date the sale shall become absolute, or on condition that on
such payment being made the sale shall become void, or on condition that on such
payment being made the buyer shall transfer the property to the seller, the
transaction is called mortgage by conditional sale and the mortgagee a mortgagee
by conditional sale: [Provided that no such transaction shall be deemed to be a
mortgage, unless the condition is embodied in the document which effects or
purports to effect the sale.]

(d) Usufructuary mortgage.—Where the mortgagor delivers possession 1[or

expressly or by implication binds himself to deliver possession] of the mortgaged
property to the mortgagee, and authorizes him to retain such possession until
payment of the mortgage-money, and to receive the rents and profits accruing from

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Bare Act, The Transfer of Property Act 1882,(sec. 58), (Eastern Book Company, Lucknow)

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the property [or any part of such rents and profits and to appropriate the same] in
lieu of interest, or in payment of the mortgage-money, or partly in lieu of interest
[or] partly in payment of the mortgage-money, the transaction is called an
usufructuary mortgage and the mortgagee an usufructuary mortgagee.

(e) English mortgage— where the mortgagor binds himself to repay the
mortgage-money on a certain date, and transfers the mortgaged property absolutely
to the mortgagee, but subject to a proviso that he will re-transfer it to the
mortgagor upon payment of the mortgage-money as agreed, the transaction is
called an English mortgage.

(f) Mortgage by deposit of title-deeds.—Where a person in any of the following

towns, namely, the towns of Calcutta, Madras, [and Bombay], and in any other to
which the [State Government concerned] may, by notification in the Official
Gazette, specify in this behalf, delivers to a creditor or his agent documents of title
to immoveable property, with intent to create a security thereon, the transaction is
called a mortgage by deposit of title-deeds.

(g) Anomalous mortgage.— A mortgage which is not a simple mortgage, a

mortgage by conditional sale, an usufructuary mortgage, an English mortgage or a
mortgage by deposit of title-deeds within the meaning of this section is called an
anomalous mortgage.

Amendment:
The following amendments have been made by the Amending Act, 20 of 19293:-

1. A provision has been inserted in section 58 (c)

2. Section 58 (d) has been made more exhaustive by the inclusion of the case
where the mortgagee is entitled to appropriate a portion only of the income
of property mortgaged in payment of mortgage money.
3. Clause (f) and (g) have been newly added. The act recognized a mortgage by
deposit of title-deeds in section 98, but there was no definition of such
mortgage before.

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Dr.G.P. Tripathi, The Transfer of Property Act 403, (Central Law Publications, Allahabad, 19th edition)

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These amendments have been declared not to be retrospective in their operation by
section 93 of the Amendment Act.

Rights Of Mortgagor4:-
1. Redeem Of Property:- As the loan is returned then a mortgagor has a right to
redeem the property. All documents and the mortgage deed should be returned to
the borrower.

2. Right to Claim Damages:- If the property is damaged during the possession of

the mortgagee then the mortgagor has a right to claim the damages from the
mortgagee.

3. Partial Redemption:- If mortgagee wants to acquire a share in the mortgaged

property through inheritance or purchase the mortgagor has the right of partial
redemption.

4. Right of Lease:- If the possession of the property is in the hands of mortgagor

then he can make lease of this property for the ordinary period.

5. Follow the Agreement Deed:- The mortgagor will observe all the conditions
contained in the agreement deed. He will also defend the title of property if the
property is in his possession.

6. Recovery of Possession:- When the mortgagor returns the loan then he has a
right to recover the possession of the property from the mortgagee.

7. Liability of Taxes :- If property is in the possession of the mortgagor then the

liability of all types of taxes will be on the mortgagor over of Modaraba certificates
is not impressive. Now the ratio of equity is very high in relation to debt financing.

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Mortgagor, Mortgagee and Mortgage: Rights and Liabilities, available at http://lawfultalks.com/mortgagor-
mortgagee-and-mortgage-rights-and-liabilities/, (accessed on 30th August 2019)

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Liabilities of Mortgagor5 –
Under Section 65 of the Transfer of Property Act, 1882 the liabilities of the
mortgagor are as follows –

1) A Mortgagor must have the right to mortgage such property;

2) The mortgagor must have a legal title of the property;

3) The mortgagor is liable to pay all taxes if the property is not in the possession of
the mortgagee.

4) The mortgagor is liable to pay the lease rent of the mortgaged property if the
mortgaged property is under the lease. The mortgagor must comply also with the
terms and conditions of the lease deed if the mortgaged property is under lease
deed; and

5) The Mortgagor is liable to comply also with the terms and condition of the
previous mortgage deed if any relating with the same property.

Rights Of Mortgagee:-
Following are the important rights of mortgagee:

1. Selling Right:- If borrower fails to return the loan in time then the mortgagee
has the right to sell the property of the mortgagor. But it will be sold and getting
decree from the court. Property will be sold by auction.

2. Shortage of Money Case:- After selling the property if amount is less than the
loan, the balance can be recovered from the person by getting the decree from the
court.

3. Usufructuary Case:- In this case mortgagee has no right to sell the property and
to obtain the decree from the court. The banker can retain the possession till the
recovery of the loan.

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Mortgagor, Mortgagee and Mortgage: Rights and Liabilities, available at http://lawfultalks.com/mortgagor-
mortgagee-and-mortgage-rights-and-liabilities/, (accessed on 30th August 2019)

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4. Refusal of Debt:- If a borrower refuses to return the loan or he is unable to pay
the debt then the lender can get a foreclosure decree from the court.

5. Adjustment of Payment:- The banker has a right to distribute the payment

received after the sale of property according the principal amount, interest and
other charges.

6. Sale of Private Property:- In case of private property the mortgagee will issue
at least 3 months’ notice to the mortgagor before selling the property.

Liabilities Of Mortgagee:-
When property is in the possession of the mortgagee then it has the following
duties or liabilities:

1. Property may not be damaged.

2. No alteration is allowed in property.

3. The property must be insured.

4. Property must be kept secured.

5. Rent of the property must be collected.

6. Govt. Revenue must be paid.

7. Property must be kept clear from all due.

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Conclusion:
The dream of working class is to own a house. For the majority of aspiring
homeowners, a mortgage is an indispensable element of their home financing. This
long-term financing option provides home buyers with a valuable anchor that
allows them to move forward with their purchase knowing that they will be able to
successfully finance this significant investment. When the process of selecting a
mortgage begins, it is not uncommon to be overwhelmed by the large number of
terms and concepts that exist in this industry. Understanding the language of home
lending will help you make educated decisions about the money you borrow.
Defining the terms mortgagor and mortgagee is a great first step on the path to
educating yourself about home mortgages. Thus, the mortgagor is the entity
lending the money and the mortgagee is the individual or persons borrowing it.
When you obtain a mortgage loan, you will sign a covenant promising to repay the
amount borrowed according to the terms outlined in the loan agreement. You will
also sign a mortgage, giving the lender a lien or security on the property. In the
event you do not pay back the loan, the lender has the right to sell the property to
complete repayment of the loan. If there is more than one mortgage, the first
mortgage is paid before any secondary mortgages are paid, if there is enough left
over from the sale. The lender will not own the property through a mortgage loan
only retain a lien on the property. You are generally free to do with the property as
you wish, except that transferring the property without paying off the mortgage is
usually prohibited without the lender’s permission.

There may be more than one mortgage on a parcel of real estate. Mortgages filed
later in time are called second (or third) mortgages. Because they are considered
inferior, the first mortgage gets paid out first in the event of default.

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Bibliography:

 Bare Act of, The Transfer of Property Act, 1882

 Text book, Dr. G.P. Tripathi, The Transfer Of Property Act
 Website, http://lawfultalks.com/mortgagor-mortgagee-and-mortgage-rights-
and-liabilities/
 http://www.legalservicesindia.com/article/1593/Word-History-of-Mortgage-
in-India.html

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