"Mortgagee's Power to Sell Under Section 69 of the Transfer of Property Act, 1882

The power of the mortgagee to sell without intervention of the court, before the incorporation of
such right under Section 69 of the Transfer of Property Act, 1882, was a subject-matter of
controversy and divergent views. This power of sale, a feature of the English mortgage was originally
confined to Englishmen or to Indian residents in the Presidency Towns who were conversant with
the forms of English mortgage and English law and procedure as administered in the Presidency
Towns. In the mofussil, prior to the Transfer of Property Act, there were certain regulations
governing the law of mortgages between the parties who were not Europeans. Those regulations did
not empower the mortgagee to effect sale of the mortgaged property without the intervention of
the court.

Section 69 of the Transfer of Property Act, 1882, was modelled on the English Conveyancing Act,
1881 and the English Law of Property Act, 1925. Section 69 was later remodelled by amending Act 20
of 1929 drawing the principles from the English law.

Section 69 of the Transfer of Property Act, 1882 contains five sub-sections. Sub-sections (1) and (2)
as detailed hereunder1, deal with the circumstances under which the mortgagee's right to exercise
the power of sale without the intervention of the court arises. Sub-sections (3) and (4) respectively
dwell on the title of the purchaser from the mortgagee and the manner of deployment of sale
proceeds of the mortgaged property by the mortgagee, his duties and responsibilities. Sub-section
(5) states that nothing in this section applies to powers conferred before the first day of July, 1882.

The right under Section 69 is as much and as full a right as the right of redemption of the mortgagor.
The mortgagee is, in no sense, a trustee for the mortgagor in the matter of the power of sale; as he
holds it for protection of his interest and for his benefit. The mortgagee is not debarred from
exercising the power of sale, even though the mortgagor files a suit for redemption. So long as the
mortgage money is not paid or validly tendered, the mortgagee with full knowledge of a pending suit
for redemption and even to defeat the suit can enforce his power of sale under this section.

While clauses (b) and (c) of sub-section (1) require that power of sale without intervention of the
court must be expressly conferred on the mortgagee by the mortgage deed, no such conditions need
be fulfilled, where the mortgage is an English mortgage and neither of the parties is Hindu,
Mohammedan or Buddhist or any sect, race etc., as stipulated under clause (a) of sub-section (1).

Power of sale without intervention of court The words "power of sale" refer to a clause expressly
included in the mortgage deed. They mean conveyancing. The expression has not been defined in
the Act. It includes all steps which are necessary to be taken in connection with a sale. The law
permits the greatest freedom of contract, unless it is expressly taken away. If any party contends
that a particular clause restricts, in any way, the power of parties to enter into a contract, the
burden rests on him to show that the words prevent an agreement between the parties.
The power of sale, under Section 69, can be exercised only in the three cases mentioned in clauses
(a), (b) and (c) of sub-section (1). The situation of the property is immaterial in cases falling within
clauses (a) and (b).

A mortgagee has no right of sale if there is no default in payment of the mortgage money. There can
be default in payment of mortgage money only after it has become due, and not before. In cases,
where no time is fixed for payment of the mortgage money, there must be a demand for payment
before it can be said that the mortgagor has made a default in payment of the mortgage money. It
has been held in Purasawalkam Hindu Janopakara Saswatha Nidhi Ltd. v. Kuddus Sahib2 that where
the amount due for principal is not repayable at any particular date, nor is anything stated as to
when it is to be repaid, there can be no default in the payment of the principal sum due until there is
a demand made for the money.

Section 69(1)(a) The first case in which the mortgagee can have the power to sell is mentioned in
clause (a) of sub-section (1) of Section 69 of the Transfer of Property Act, 1882. It lays down the
following conditions for the acquisition of the power, namely: (1) that the mortgage must be an
English mortgage, as defined in Section 58(e) of the Transfer of Property Act, 1882, and

(2) neither the mortgagor nor the mortgagee must be- (i) a Hindu, Mohammedan or Buddhist, or (ii)
a member of any other race, sect, tribe, or class from time to time specified in this behalf by the
State Government in the Official Gazette.

The power of sale is inherent in the mortgagee, if Conditions (i) and (ii) mentioned above are
satisfied. Thus it can be exercised where an English mortgage is executed by a company, which can
be said to have no religion3 In L.V. Apte v. R.G.N. Price the A.P. High Court applied Section 69 to an
English mortgage between a company and trustees for debenture-holders, some of the trustees
being Hindus.

Section 69(1)(a) is confined only to a select sect of mortgagors and mortgagees who do not belong
to the majority communities in India. This section is taken advantage of by corporate bodies who are
not natural persons since such bodies are not deemed to belong to any religion. As far as individuals
are concerned, this section can be adopted if both the mortgagor and mortgagee do not belong to
the religion, race, sect, tribe or class which are excluded from the purview of Section 69(1)(a).

If the conditions in Section 69(1)(a) and Section 69(2) are complied with, mortgagee's power of sale
arises suo motu. It is opined that Section 69(1)(a) is outdated in the present circumstances since the
stipulations cannot be applied to the commercial transactions like mortgages, in letter and spirit. No
community can be compelled to exclude themselves from a particular commercial venture as it
would affect their constitutional rights.

Sections 69(1)(b) and 69(1)(c) The words "expressly conferred" in clauses (b) and (c) indicate that the
inherent power available under clause (a) is not available under clauses (b) and (c). To bring a case
under Section 69(1)(b), it is necessary to establish that (i) a power of sale without the intervention of
the court is expressly conferred on the mortgagee by the mortgage deed, and (ii) the mortgagee is
Government. This clause is applicable only where the mortgagee is the Government and does not
extend to any other person. It applies both to the State Governments and the Central Government.
Section 69(1)(c) requires that (i) a power of sale without the intervention of the court must have
expressly been conferred on the mortgagee by the mortgage deed, and (ii) the mortgaged property,
or any part thereof, must, on the date of the execution of the mortgage deed, have been situate
within the towns of Calcutta, Madras, Bombay or in any other town, or area, which the State
Government may, by notification in the Official Gazette, specify in this behalf. It is observed that the
three cases mentioned in clauses (a), (b) and (c) of sub-section (1) of Section 69 of the Transfer of
Property Act are independent and mutually exclusive. Clause (a) applies only where the mortgage is
an English mortgage and the parties do not belong to certain religions, or sects, etc. Clause (b)
applies to cases where the mortgagee is the Government. Under clauses (a) and (b), it is not
necessary that the property mortgaged should be situated in any particular place. It may be situated
in any part of India. But an essential condition of clause (c) is that the mortgaged property must be
situated within any of the towns or area, specified in the clause. Conditions for exercise of power
Section 69(2)(a) and Section 69(2)(b) specify the conditions for exercise of the power. These
conditions are imperative and cannot be varied by an agreement between the parties. The power to
exercise the right of sale arises when (i)(a) notice in writing requiring payment of the principal
money has been served on the mortgagor, or on one of several mortgagors, and (b) default has been
made in payment of the principal money, or of part thereof, and (c) such default has continued for
three months after such service; or