MORTGAGE

Definition and kinds:

A mortgage according to section 58 of the T.P. Act is the transfer of an interest in specific
immovable property for the purpose of securing the payment of money advanced. The money
may be advanced by way of loan (existing or future) or performance of an act giving rise to a
pecuniary liability. The transferor is called the mort gagor and the transferee the mortgagee.
- If the mortgage is made under an instrument it is called mortgage deed. The amount secured
is the mortgage-money.
- The deed must be registered if the value is Rs. 100 and above. It must be in writing, signed
and duly attested
Kinds: There are different kinds of mortgages recognised by the T.P. Act:
i) Simple mortgage, ii) Mortgage by conditional sale, iii) Usufructuary mortgage, iv) English
mortgage v) Equitable mortgage (mortgage by deposit of title deeds) vi) Anomalous
mortgage.
Doctrine of Marshaling and Contribution.
The doctrine of marshaling is stated in Section 81. The owner of two (or more) properties
mortgages one (or more) of the properties to another person, the subsequent mortgagee is
entitled to have the prior mortgage debt satisfied out of the property (or properties)
not mortgaged to him, so far as the same will extend. However, this will not prejudice the
rights of the prior mortgagee or any person who has for value acquired an interest in any of
the properties.
Leading case is :Aldrich Vs. Cooper: In this case:
The first creditor C had a right against the property of the debtor D. The second creditor, S,
had certain rights against the property of the debtor. In these circumstances if the first creditor
C is allowed to proceed against the property the rights of 2nd creditor S would be affected.
The principle is that one creditor shall not disappoint another creditor. Hence, if one creditor
has a security in respect of two properties of the mortgagor and another creditor has a security
in one of the properties only, then the two properties shall be marshalled.
Contribution:
The converse of marshalling is contribution. This occurs when the mortgaged property
belongs to two or more persons, having distinct and separate rights of ownership. In such a
case if there is a mortgage debt both or all should contribute rateably. The value as on date of
mortgage shall be taken to calculate the contributions. Eg.: Property X is mortgaged to A for
Rs.200/- and sold to C. Properties X & Y are mortgaged to B for Rs.400/- & sold to D. The
value of X & Y is Rs.500/- each. The contributions of C & D are Rs.150/- and 250/-
respectively
The two properties X & Y have the mortgage-amount of Rs.400/-advanced by B.Hence B
may recover this amount from C & D. From C : 500-200=300 Rs. Half of this = 150 Rs.
From D : Value 500 Rs. Half of this = Rs.250/-
A) Rights of the mortgagee:
i) The mortagee may spend any necessary amount for :
a) The preservation of the mortgaged property from destruction, forfeiture or sale.
b) for supporting mortgagors title.
c) to make his title good against the mortgagor (defending suits against mortgagor).
ii) Where the mortgaged property is sold under Revenue sales or acquired by Govt., the
mortgagee is entitled to claim his money the surplus of proceeds of such sale or acquisition.

B) Liabilities of the mortgagee:

i) Mortgagee should prudently manage the property.
ii) He must make endeabours to collect the rents & profits. iii) He must pay all Govt.
revenues & Public charges and all rents due. (This is subject to agreement) iv) Necessary
repairs to property are to be made from collection of rent etc.
v) He should not do anything to destroy or damage the property. vi) He must maintain clear,
full and accurate accounts. vii) When the mortgagor tenders or deposits any money, the
mortgagee should account for the same. The mortgagee becomes liable, for loss incurred by
the mortgagor due to violation of these provisions.