You are on page 1of 13

DEPOSIT OF MORTGAGED MONEY

Transfer of Property Act

Submitted by:
SHUBHAM RAJ
ROLL NO. 2013110
SEMESTER III
DAMODARAM SANJIVYYA NATIONAL LAW UNIVERSITY
Vishakhapatnam
October 2014
1

CERTIFICATE
Subject: Transfer of Property Act
Name of Faculty: Dr. Raghuram
Particulars

Date and Signature of the

Remarks

Faculty
Abstract

Submission

&

Verification
First consultation
Second consultation
Third consultation & final
submission

I, Shubham Raj, hereby declare that this project titled DEPOSIT OF MORTGAGED
MONEY submitted by me is original works undertaken by me.

(Signature of candidate)
Place: Visakhapatnam

Shubham Raj

Date:

Roll no. 2013110


Semester III

ACKNOWLEDGEMENT
2

Whether it be a small needle or the biggest skyscraper, we need some helping hands in the
making of it, nothing comes out of a solo effort! And hence, Im obliged to express my deep vow
of gratitude, first of all, towards the subject Professor who gave me the golden opportunity to do
this wonderful project on the topic DEPOSIT OF MORTGAGED MONEY? Doing the project
was an experience where the knowledge was my best takeaway.
I would also like to thank my parents and friends who helped me a lot in finishing this project
within the limited time.
Once again, thanks to all who helped me in completing this project work.
Shubham Raj.

TABLE OF CONTENTS

TITLE
ACKNOWLEDGEMENT

Page number
03

LIST OF CASES

05

1. INTRODUCTION

06

2. RESEARCH METHODOLOGY
2.1 Aims and objective
2.2 Research questions
2.3 Sources of data
2.4 Methodology
2.5 Mode of citation

06
06
06
07
07
07
07
07
07
07
08

3. GENERAL DEFINITIONS
3.1 Deposit
3.2 Mortgage
3.3 Deposit of mortgage money
3.4 Redemption
4. DEPOSITING THE MONEY DUE ON MORTGAGE IN THE
COURT
4.1 Depositing in court, a special kind of tender
4.2 Right to money deposited by the mortgagor
4.3 deposit more or less than due amount
5. POST DEPOSIT
5.1 Effect of withdrawal of the deposit by the mortgagor
5.2 Dispute on title of the property

08

08
08
09
09

CONCLUSION

09
10
11

BIBLIOGRAPHY

12

BOOKS

LIST OF CASES

District Co-op Central Bank Cluttoor vs. V. Suryanarayan Setty, 2003(3) Civil. Lj 194 at

195
Durga Prasad vs. Tulsya bai 1998 (2) CCC 14
Govindam nair vs. Cheuvamma 35 M.L.J. 313
Horay Krishna vs. Sashi Bhushan AIR 1941 Cal. 18=45 C.W.N. 174
Ramachandra vs. keshobati Kumari ILR 36 Cal. 849 (P.C.)
Raghu nath vs. Competent Officer, Delhi AIR 1971 SC 131

1. INTRODUCTION
Under the transfer of property Act, 1882 a mortgagor has three remedies when it comes to the
redemption of the mortgaged property, (a. He may tender mortgage money directly/privately to
the mortgagee under Section 60 of the Act, b. He may deposit money in court under section 83 of
the Act or c. He may institute a suit for redemption under Section 91 of the Act). He can use any
of the three rights available to him and cannot be forced to resort to any one remedy in particular.
The provision of making deposit in court, laid down in Section 83, is intended to remove the
inconvenience that may arise due to the tender out of the court, for instance, mortgagee even
after being paid may claim the money back and might sue the mortgagor for it as the mortgagor
would not have the proof of payment made outside the court.
This deposit may be made at any time after the principal money payable in respect of mortgage
has become due and before the suit for redemption of the mortgaged property is barred. The
deposit also may be made by any other person entitled to institute the suit for redemption. Under
Section 83 of the Act, on the deposit of such money it is the duty of the court to cause a written
notice of deposit to be served on mortgagee.
The deposit ensures the mortgagor a sure mode of proof that he has deposited the mortgaged
money and relieves him from any probable future issues from the side of mortgagee. Though
there is interference by the court under this section, the functions are merely ministerial and not
judicial.
2. RESEARCH METHODOLOGY
2.1. Aims and objective
Over the course of this project the researcher endeavours to analyse the Sections 354 & 509 of
the Indian Penal Code with gender biasness in its core.
2.2 Research questions
1) What is mortgage?
2) What does deposit of mortgaged money mean?
3) Who can deposit the mortgaged money?
4) In what cases can the money be deposited in the court?

2.3 Sources of data


The researcher has relied primarily on the secondary sources of data in the form of books,
articles, reports and Internet sources.
2.4 Method of writing
The researcher has followed a descriptive style throughout the project whereas the methodology
followed is doctrinal.
2.5 Mode of citation
The Harvard Bluebook Citation Guide had been followed.
3. GENERAL DEFINITIONS
3.1 Mortgage
Sections 58-104 of the transfer of property Act deal with mortgage, its types and the issues
related to it. The section 58 of specifically defines the word mortgage as- 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, on existing or future debt, or the performance of an
engagement which may give rise to a pecuniary liability.
3.2 Deposit
Deposit under this purview means and includes the deposition of the amount of money borrowed
from the mortgagee in lieu of the security given by the mortgagor summed up with the interest
(if applicable) on that money i.e. the principle sum and the interest (if applicable and as agreed)
of the money that the mortgagor is supposed to pay to the mortgagee to get his properties back.
3.3 Deposit of mortgage money
Deposit of mortgage money means returning the money borrowed along with the interest on it (if
applicable) in order to get release of the property give as a security to the borrowed money to the
mortgagee by the mortgagor.

3.4 Redemption
Under this Act, redemption is a right given to the mortgagor; it is basically the action of
regaining or gaining the possession of the property given as security for clearing a mortgage. It
has been defined under section 60 of the transfer of property Act.
4. DEPOSITING THE MONEY DUE ON MORTGAGE IN THE COURT
4.1 Depositing in court, a special kind of tender
Deposit of mortgaged money in the court is a special kind of tender designated to make available
to the mortgagor a sure mode of proof of the fact he has made a tender. When the mortgagor pays
the amount due upon the mortgage into court and pays batta for notice with the proper address of
the mortgagee, he has done all that has to be done by him and interest ceases to run. If the
mortgage is usufructuary1, the mortgagor becomes entitled to mesne profits from the date when
the money was deposited and the notice sent to the mortgagee 2. The mere fact of tender does not
extinguish the security. That result follows only when the mortgagee applies or and receives the
money in terms of section 83 of the Act.3
4.2 Right to money deposited by the mortgagor
The court shall thereupon cause written notice of deposit to be served on the mortgagee, and the
mortgagee may, on presenting a petition stating the amount due on mortgage, and his willingness
to accept the money so deposited in full discharge of such amount and on depositing in the same
court the mortgage deed and all documents in his possession or power relating to the mortgaged-

1 Where the mortgagor delivers possession or expressly or by implication binds himself to deliver
possession of the mortgaged property to the mortgagee and authorises him to retain such possession until
payment of the mortgage-money, and to receive the rents and profits accruing from the property or any
part of such rents and profit and to payment of the mortgage-money, or partly in lieu of interest, or in
payment of themortgage-money, or partly in lieu of interest or in payment of the mortgage-money, the
transaction is called an usufructuary mortgage and the mortgagee an usufrustuary mortgagee.
2 Govindam nair vs. Cheuvamma 35 M.L.J. 313
3 G.C.V. Subba Rao, Law of transfer of property, Alt Publication Hyderabad-2 (5 th ed., 2010), pg no.
1092
8

property, apply for and receive the money, and the mortgage-deed, and all such other documents
so deposited shall be delivered to mortgagor or such other person as aforesaid.4
Where the mortgagee is in possession of the mortgaged property, the court shall, before paying to
him the amount so deposited, direct him to deliver possession thereof to the mortgagor and at the
cost of the mortgagor either to re-transfer the mortgaged property to the mortgagor or to such
third person as the mortgagor may direct or to execute and have registered an acknowledgment
in writing that any right in derogation of the mortgagors interest transferred to the mortgagee
has been extinguished.5
4.3 deposit more or less than due amount
For the tender to be valid the whole amount should be deposited including the interest upto the
day depositing, if the amount tendered is larger than the amount that is due, the validity of the
tender is not affected.6
An amount deposited less than what is due is not a valid tender and interest doesnt cease to run
even protanto when part payment is done. But in case, by bona fide miscalculation, the tender
falls short of the amount due by a small amount, the question arises whether the tender is valid or
is validated by the maxim- De Minimis non Curat Lex7
5. POST DEPOSIT
5.1 Effect of withdrawal of the deposit
By the mortgagee:
When the mortgagee withdraws the amount deposited under section 83 to his account, the
mortgage is extinguished. If the withdrawal is not made in his capacity as mortgagee, there is no
extinction of liability under the mortgage. It is for the creditor to show that he or his agent
4 G. P. Tripathi, the transfer of property Act, Central Law Publications (18 th ed., 2014) pg no.-478
5 id
6 Subramania Aiyar vs. narayanaswami 34 M.L.J. 439
7 Supra note 3 at 1094-1095
9

withdrew the money under such condition that the statutory result, i.e. full discharge, did not
follow from withdrawal.8 The court has no jurisdiction save with the consent of the mortgagor or
his representatives to permit the money to be drawn out of court on any terms other than those
imposed by the statute.9

By the wrong party:


The mortgagees right to enforce the security is not destroyed if the deposit tendered by the
mortgagor is withdrawn by the third party whos not entitled to it. 10 It has been decided in Horay
Krishna vs. Sashi Bhushan11.
By the mortgagor:
Where the mortgagor has deposited such amount of money without making a previous tender and
subsequently withdraws the same or any part of it the interest of such amount so withdrawn
should be paid from the date withdrawn. This proviso was added to the section 84 of the Act in
its amendment in 1929. Before this amending Act the wasnt clear on this subject as to who was
entitled to deposit such money.12
5.2 Dispute on title of the property
A mortgagor or any other person, entitled to institute a suit, shall deposit the mortgage money in
the court and the court shall issue notice to the mortgage and in case the mortgagee presents
8 Ramachandra vs. keshobati Kumari ILR 36 Cal. 849 (P.C.)
9 Supra note 3 at 1099
10 Supra note 3 at 1100
11 AIR 1941 Cal. 18=45 C.W.N. 174
12 Supra note 3 at 1098
10

petition expressing his willingness to accept deposit in discharge of the mortgage amount and on
depositing the mortgage deed in the court and other document shall be delivered to the
mortgagor or the other person. But if the mortgagee is in possession of the property, the court
shall direct the mortgagee to deliver the possession to the mortgagor after proper
documentation.13
While dealing with the redemption on deposit of mortgage money and dispute of title to property
in District Co-op Central Bank Cluttoor vs. V. Suryanarayan Setty 14 it was held that the learned
counsel appearing for the petitioner bank submits that order of the court below is erroneous and
contrary to law. He also submits that the petitioner bank has purchased the petition schedule
property for a valid consideration and the mortgage amount was also deposited in the bank. Since
the respondents were willing to redeem the mortgage by paying the mortgage amount, the only
remedy for appropriate relief lies under section 83 of the Act, and lower court did not properly
appreciate the provisions thereof. He alternatively submits that if at all there is an omission, the
omission is not converting the petition into suit under section 91 of the Act, which is purely
technical in nature. The lower court ought to have rectified the same as it had territorial and
pecuniary jurisdiction to adjudicate such matter. On the other hand, the learned counsel
appearing for the respondents submits that when a dispute as regards title of the property is
raised, no application would lie under section 83 of the Act. Moreover, the conditions precedent
for exercising the power under section 83 of the Act have not been fulfilled in this case. Further,
it was already brought out in written statement filed by the respondents that the petitioner bank
raised a dispute with regard to the title of the petition schedule property before the deputy
commissioner of endowments, claiming the same by virtue of sale in its favour and that the
deputy commissioner held against the petitioner bank and that order has become final. Therefore,
it was held to be the property of the temple. Thus he submits that there is a substantial dispute
with regard to the title of the property, which cannot be decided under section 83 of the Act in
which only summary proceedings are contemplated. He relies on the decision of the Madhya

13 Justice P.S. Narayana, the transfer of property Act, 1882, Gogia law House, Hyd-02 (2013) pg no. 798
14 2003(3) Civil. Lj 194 at 195
11

Pradesh high court in the Durga Prasad vs. Tulsya bai15 and also Supreme Court in Raghu nath
vs. Competent Officer, Delhi16.
CONCLUSION
According to the section 83 of the Act, the mortgagor, to return the debt, at any time after which
the principal money (along with the interest, if applicable) becomes payable, can deposit in any
court in which he might have instituted the suit for, the amount remaining due on the mortgage.
Whereas, in case where the mortgagor has deposited such amount without having made a
previous tender thereof and has subsequently withdrawn the same or any part of it, interest on the
principal money shall be payable from the date when the withdrawal has been made. Also,
nothing shall be deemed to deprive the mortgagee of his right to interest when there exists a
contract that-he shall be entitled to reasonable notice before payment or tender of the mortgagemoney, and such notice has not been given before the making of the tender or deposit, as the case
may be.

BIBLIOGRAPHY
BOOKS

B. B. Mitra, The Transfer of Property Act, 1882, Eighth ed., 2004

Dr. Maheswara Swamy, Propety Law, fourth ed., 2008

G.C.V. Subba Rao, Law of transfer of property, Alt Publication Hyderabad-2

G. P. Tripathi, the transfer of property Act, Central Law Publications

H.N. Tiwari, Transfer of Property Act (2005)

Justice P.S. Narayana, The Transfer Of Property Act, 1882, Gogia law House, Hyd-02
(2013)

15 1998 (2) CCC 14


16 AIR 1971 SC 131
12

13