Nature and Scope of Mortgage Law in India and Different Kinds of Mortgages

By Shefali | Views 3353

0 0 0 Blogger0 pocket0 Digg0
A mortgage is a transfer of an interest in immovable property. One person gives
his/her property to another in exchange for money as a loan for a specific period.
The loan can be taken on immovable property specifically, which is tangible form.
However, in case of default in repayment, person holding the mortgaged property can
sell or use the property to compensate for his loss.

The transaction conditions depend on the parties; for example, when a person lends
money to another, he may do so without asking for any security or demand some
security for the payment of money. Then, in case of default, when there was no
security taken, person who lent the money may sue for repayment. And if there is
some security taken, that security may be used to recoup the lost money.

Analysis of nature, and scope:

The concept of mortgage and pledge often found similar; however, there is a
fundamental difference between the two. Pledge is when the loan is secured against
movable property, whereas loan security is against immovable property in mortgage.
Mortgage transactions can be traced back to the early times when there was no law
on mortgage, and still, people were performing this kind of transaction. This
practice is universally excepted with or without any specific laws on it. As shown
in the below illustration.

There was no law in specific related to mortgage property transactions before 1882.
After establishment of Transfer of Property Act, the rights and liabilities, laws
governing with mortgage, mortgagee, mortgagor took a systematic and much-needed
change, and detailed regulations were made. Before the 1882 Act, though act did not
apply to previous transactions, however, mortgagor's right to redemption existed to
recoup the repayment of the mortgage money.[1]

The suit of mortgage is subject to the rule of lis pendens. It means that during
pendency of suit, the mortgagor cannot enter into lease contract. The essential
feature of mortgage that there is a proviso for redemption;[2] it is a conveyance
of the legal interest in property. It means that after the repayment of loan, the
conveyance becomes void.

Under TPA, provisions of mortgage transactions have been provided from Section 58
to 104.[3] Section 58 of TPA[4] defines mortgage. In case,[5] SC observed that
mortgage law in India is wholly embodied in Section 58 of TPA, read with CPC. Order
XXXIV[6], Rule 1-15[7] deals with suits related to mortgage transactions. The court
dealing with the suit is barred from going beyond these provisions. Section 2(a) of
the Stamp Act[8] also defines "mortgage."