READING A PRIMARY SOURCE

TOPIC:

Liabilities of Mortgagee

Submitted To:

Dr. Aseem Paliwal

Submitted By:

KULDEEP SHARMA

2018-23 BBA LLB(HONS)

7th Semester

Section: B

KARNAVATI UNIVERSTY GANDHINAGAR.

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 DECLARATION

“THE TEXT REPORTED IN THE PROJECT IS THE OUTCOME OF MY OWN

EFFORTS AND NO PART OF THIS PROJECT ASSIGMENT HAS BEEN COPIED IN
ANY UNAUTHORISED MANNER AND NO PART OF IT HAS BEEN
INCORPORATED WITHOUT DUE ACKNOWLEDGMEMNT”

NAME- Kuldeep Sharma SIGNATURE

7th Semester

Enrollment -No 20180401043

Section- B

Batch- 2018-2023

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Contents

OBJECTIVES OF THE STUDY ......................................................................................................... 3

RESEARCH QUESTIONS .................................................................................................................. 3
RESEARCH METHODOLOGY ........................................................................................................ 3
SOURCES OF DATA ........................................................................................................................... 3
LIMITATIONS OF THE STUDY....................................................................................................... 3
Who is Mortgagor and Mortgagee of Property?................................................................................ 4
Types of Mortgages of Property .......................................................................................................... 4
Rights and Liabilities of Mortgagee .................................................................................................... 5
Liabilities of Mortgagee ........................................................................................................................ 7
Possession........................................................................................................................................... 7
Legal aspects....................................................................................................................................... 7
Case Study on Rights and Liabilities of Mortgagee ............................................................................... 9
Conclusion to Rights and Liabilities of Mortgagee .............................................................................. 10
Bibliography ........................................................................................................................................ 11

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OBJECTIVES OF THE STUDY
By doing this research, the researcher want to highlight the various provisions related to
Liabilities of Mortgagee

RESEARCH QUESTIONS
The researcher has formulated following questions:
1. Who is Mortgagor and Mortgagee of Property
2. Types of Mortgages of Property
3. What is the Liabilities of Mortgagee
4. Case Study on Rights and Liabilities of Mortgagee

RESEARCH METHODOLOGY
The researcher will be using only doctrinal method of Research. Doctrinal method will include
library sources.

SOURCES OF DATA
1) Primary Sources
The Transfer Of Property Act : Avtar Singh
2) Secondary Sources
• Journals
• Websites
• Books

LIMITATIONS OF THE STUDY

The researcher has monetary limitations, Time limitations and Territorial limitations.

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Who is Mortgagor and Mortgagee of Property?1

The person who has transferred the interest in a specific immovable property is known as
Mortgagor and the transferee or person in whose favor the interest is being transferred is known
as Mortgagee. A mortgagee is an entity that lends money to a borrower for the purpose of
purchasing real estate. In a mortgage lending deal the lender serves as the mortgagee and the
borrower is known as the mortgagor. A mortgagee presents the interests of the lending
institution in a mortgage deal.

Types of Mortgages of Property2

There are six kinds of mortgages which are recognized under the transfer of property act, 1882.
They are discussed in the act from Section 58(b)-58(g). Following are the different types of
Mortgage: –

1. Simple Mortgage

2. Mortgage by Conditional Sale

3. Usufructuary Mortgage

4. English Mortgage

5. Mortgage by Deposit of Tittle Deeds

6. Anomalous Mortgage

1
Singh Avtar, “Textbook on The Transfer of Property Act”, Universal Law Publishing Co. Pvt. Ltd., New Delhi,
edn., 2016, p. 130
2
, Transfer of Property Act, 1882.bare act

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Rights and Liabilities of Mortgagee3

A mortgagee possesses one right against the property and another against the mortgagor
personally. Following are the rights of mortgagee: -·

Right to Foreclosure or Sale

The right of foreclosure is a right available to a mortgagee to recover his outstanding money.
The transaction is affected through a document called the mortgage deed. The relevant
provision regarding foreclosure are contained under section 67 of the transfer of property act.

Right to sue for Mortgage Money4

A mortgagee has the right to sue for the mortgage money where the mortgagor bind himself to
repay, where the mortgaged property wholly and partially destroyed, where the mortgagee is
deprived of his security due to a wrongful act and where the mortgagor has failed to deliver
possession of the property to the mortgagee. Section 68 deals with sue for mortgage money in
transfer of property act.

Power of Sale when valid

Section 69 of the transfer of property act, 1882 states that, the mortgagee has the power to sell
the mortgaged property without the intervention of the court, on default of payment of
mortgage money by the mortgagor in following three cases:

1. When the mortgage is an English mortgage between non-Hindus, non- Muslims, non-
Mohammedi’s and member of the race or sect notified by the by the state government of the
official gazette.

2. When government is mortgagee, with the express provision of sale without intervention of
the court.

3
Mulla D. S., Dr. G. C. Bharuka(ed.), “The Transfer of Property Act”, LexisNexis, New Delhi, edn., 2017(Reprint),
p. 127.
4
Mulla D. S., Dr. G. C. Bharuka(ed.), “The Transfer of Property Act”, LexisNexis, New Delhi, edn., 2017(Reprint),
p. 127.

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3. When the mortgaged property is situated at Calcutta, madras, Bombay or any other gazette
town or area.·

Right to Accession – Increased Mortgaged Property

If, after the date of a mortgage, any accession is made to the mortgaged property, the
mortgagee, in the absence of a contract to the contrary, shall, for the purposes of the security,
be entitled to such accession. Provision of this act is under Section 70 of Transfer of Property
act, 1882.·

Right to Accession – Renewal of Security. Section 71, Transfer of Property Act, 1882

When the mortgaged property is a lease, and the mortgagor obtains a renewal of the lease, the
mortgagee, in the absence of a contract to the contrary, shall, for the purposes of the security,
be entitled to the new lease.·

Rights of Mortgagee in Possession

A mortgagee may spend such money as is necessary for the mortgaged property from
destruction, for making his own tittle thereto good against the mortgagor; and may in absence
of a contract to the contrary, add such money to the principal money, at the rate of interest
payable on the principal, and where no such rate is fixed, at the rate of nine percent per annum.

Right to proceed of Revenue sale or Composition on Acquisition

Section 73, Transfer of Property Act state that where the mortgaged property or any interest
therein is sold owing to failure to pay arrears of revenue or other charges of a public nature or
rent due in respect of such property, and such failure did not arise from any default of the
mortgagee, the mortgagee shall be entitled to claim payment of the mortgage shall be entitled
to claim payment of the mortgage-money, in whole or in part.

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Liabilities of Mortgagee5

Possession

Section 76 of transfer of property act provides that when during the continuance of the
mortgage, the mortgagee takes possession of the mortgaged property. Mortgagee must have to
manage the property as a person of ordinary prudence. He must use his best endeavors to collect
the rents and profit thereof; He must , in the absence of contract to the contrary, make such
necessary repairs of the property as he can pay for out of the rent and profits thereof after
deduction from such rents and profits the payments and the interest on the principal money. He
must not commit any act which is destructive or permanently injurious to the property.

He must keep clear, full accurate accounts of all sums received and spent him as a mortgagee,
and, at any time during the continuance of the mortgage, give the mortgagor, as his request and
cost, true copies of such accounts and of the vouchers by which they are supported.

A mortgagee is bound to sue on behalf of all the mortgagees in respect of which the mortgage
money has become due in the absence of express contract. During the continuance of the
mortgage, the mortgagee is bounded to protect the mortgaged property.

Legal aspects

Mortgages may be legal or equitable. Common law jurisdictions have evolved two main forms
of Mortgage:

A. The mortgage by demise

In a mortgage by demise, the mortgagee becomes the owner of the mortgaged property until
the loan is repaid or other mortgage obligation fulfilled in full, a process known as redemption.

5
Singh Avtar, “Textbook on The Transfer of Property Act”, Universal Law Publishing Co. Pvt. Ltd., New Delhi,
edn., 2016, p. 130

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Mortgages by demise are the original form of mortgages, and continue to be used in many
jurisdictions, and in a small minority of states in the united states.

B. The Mortgage by Legal Charge.

A legal charge is a method by which a lender protects the money they have lent to an individual
or company. It is a legal document signed by the borrower and which is registered against a
property at the land registry so as to alert any potential buyer of the existence of the debt .One
of the most common types of a legal charge is a mortgage from a bank or building society. In
consideration of the mortgage funds that you are borrowing, the bank or building society will
require a legal charge to be secured against the property.

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Case Study on Rights and Liabilities of Mortgagee6

In the case of Venkata Reddy v. Pethi Reddy AIR 1963 SC 992, it is indisputable that in a
mortgage suit there will be two decrees, namely, preliminary decree and final decree, and that
ordinarily the preliminary decree settles the rights of the parties and the final decree works out
those rights.

In Kausalya v. Kauleshwar 1945 ILR 25 Pat 305, it cannot also be disputed that a mortgage
merges in the preliminary decree and the rights of the parties are thereafter governed by the
said decree.

In the case of Stanley v. Wilde, it was held that any provision mentioned in the mortgage-deed
which has an effect of preventing or impeding the right to redemption is void as a clog on
redemption.7

6
Mulla D. S., Dr. G. C. Bharuka(ed.), “The Transfer of Property Act”, LexisNexis, New Delhi, edn., 2017(Reprint),
p. 127.
7
, Transfer of Property Act, 1882.bare act

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Conclusion to Rights and Liabilities of Mortgagee

A mortgage deed comes up with many rights and liabilities for both the parties involved i.e.
mortgagor and mortgagee. These rights and liabilities were being mentioned in the Transfer of
Property Act 1882 which is quite old. New amendments were also being made in the
Amendment Act of 1929 which is not implemented in a proper way so there is way in which
both the mortgagor and mortgagee are having various ideas for deceiving each other. So, the
need of the hour is to amend the laws and make it more stringent so that no party attempts to
enter into a fraudulent transaction.

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 Bibliography

BOOKS:
• Dr. Avtar Singh, “Textbook on The Transfer of Property Act”, Universal Law Publishing
Co. Pvt. Ltd., New Delhi, edn., 2016.
• Dr. Poonam Pradhan Saxena, “Property Law”, LexisNexis, New Delhi, edn., 2017(Reprint).

• D. S. Mulla, Dr. G. C. Bharuka(ed.), “The Transfer of Property Act”, LexisNexis, New Delhi,
edn., 2016(Reprint).

WEB RESOURCES:

1. https://timesofindia.indiatimes.com/bangalore/Rights-and-liabilities-of-
mortgagee/articleshow/1032141.cms
2. https://www.advocatekhoj.com/library/lawareas/mortage/rights.php?Title=Mortgage
&STitle=Rights%20and%20Liabilities%20of%20a%20Mortgagor
3. https://www.scribd.com/doc/315768089/mortgagor-rights-and-liabilities
4. https://blog.ipleaders.in/rights-liabilities-mortgagor-india/

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