MORTGAGE DEED

Project Report

Submitted to-
Dr. Muhammed Aamir Khan

(Assistant Professor)

Submitted by-
Anam Khan

Semester – VIII, Section – B, Roll No. 14

B. A. LL. B. (Hons.)

Hidayatullah National Law University

Uparwara Post, Atal Nagar – 492002 (C.G.)

 ABSTRACT
The concept of lien of property has been deeply rooted in all civilizations. As man marched from
cave to computers, this idea of lien starting finding its place in relevant provisions of law. This is
preciously the reason why we find it in every law that is known to us. In simpler words, a
mortgage deed can be said to be a deed of condition. It conveys the land outright in the first
place, secondly after the payment of a fixed amount of money it goes on with a proviso. In such
a case any conveyance will become null and void. As mentioned earlier it is a deed of conditions
which are written without the idea of a mortgage. In the India scenario, mortgage is dealt with
under Section 58 to Section 104 of Transfer of Property Act, 1882. There is a parallel benefit of
covenants and land. Excluding indemnity, transferees can enforce such benefits from time to
time.
 CHAPTER 1

INTRODUCTION AND RESEARCH METHODOLOGY

1.1Introduction

The basic human needs include having a shelter. There are many procedures through which
people can buy homes and mortgage is known to be the easiest of them all. Before getting into
the details of a mortgage deed, it is important to understand the meaning of mortgage. In simple
words, mortgage can be understood as a synonym for a loan. The amount raised from a mortgage
is often invested in a home, a piece of land or any other real estate property. It is the duty of the
borrower to repay the amount within the specified period of time to the lender. In most cases
such repayment is done in a series of regular payment inclusive of the principal and interest.

“Mortgagor” is the person who lends or mortgages his property. It is the “mortgagee” to whom
such a property is given. All the terms and conditions of the mortgage is termed as a “mortgage
deed.” The definition of the same has been mentioned in Section 58 of the Transfer of Property
Act, 1882. It reads as, “The person who mortgages his property against the loan is called
“Mortgagor.” Whereas the person to whom the property is mortgaged is called Mortgagee” and
the terms and conditions related to mortgages are contained in the “Mortgage Deed.”

1.2 Review of Literature

 H.W Chaplin, “The Story of Mortgage Law- (1985)” As the name suggests, this paper
talks about the story of development of the system of mortgage around the world. The
author focuses his attention on how the history has contributed to alleged objectives of
mortgage. The author is of the view that lien is voluntarily created by a contract and the
net result of the operation of which no one can define

 Neha Malik, “Essential elements of a mortgage deed” - This article comprehensively

evaluates and explains the meaning and extent of a mortgage deed. It deals with the
position of the same in India and also discusses various judicial pronouncements
delivered by the courts.
  Murali Manohar, Conveyancing and Pleading, 2nd Edn -2004, EBC- The author has
discussed all the important aspects of the mortgage deed in a detailed manner.
1.3 Research Objectives

In purpose of this study and the broad objective is to understand the concept of a mortgage deed,
its critical analysis and its relevancy before the court of law.

1.4 Research Questions

The following are the questions which this study aims to answer:

 The extent to which mortgage deeds is useful.

 What is the relevancy of the same before the court of law?

1.5 Research Methodology

In this kind of study, a descriptive approach has to followed. While doing research on the topic
emphasis is made on the critical aspects of the topic of study. Being non-empirical in nature the
project follows a descriptive approach for explanation and interpretation. The author has taken
help of secondary data such as articles, journals, reviews and editorials, etc.

1.6 Organization of the study

The project has been divided into three chapters in order to facilitate a clear picture of the study.

Chapter 1: Introduction and research methodology

This chapter briefly introduces the topic and structure of the study.

Chapter 2: Understanding Mortgage deed

This chapter discusses the concept of mortgage in detail and cites relevant examples and case
laws.

Chapter 3: Important case laws

This chapter makes detailed discussion of important case laws relevant to mortgage deed.
 CHAPTER 2- UNDERSTANDING MORTGAGE DEED

1.1 What is a mortgage?

The legalities of a mortgage deed are better understood when one has a basic understanding of
what a mortgage is. In the Indian context, mortgage is dealt with under Section 58 to 104 of
Transfer of Property Act. Out of all these sections, Section 69 is of utmost importance when
dealing with a mortgage deed.

When the interests in the specific property are transferred with the purpose of securing a loan it
can be termed as a mortgage. In simpler words, in order to secure a loan, one needs to give a
security to the lender so that in any case of a default the money can be recovered. Such a security
is known as a mortgage.

Mortgagor- the person who gives his property as a security against a loan.

Mortgagee- the person to whom this property is given.

Mortgage- the property given out as a security.

1.2 Mortgage deed

Section 55 (2) of the Transfer of Property Act, 1882 deals with all the relevant agreements that
the parties need to enter into for the act of transferring the title of any immovable property.
Therefore, a mortgage deed can be understood as a legal document containing all the terms and
conditions relating to a mortgage. It specifically mentions all the rights that the borrower has
pledged. In case of any default, it through this legal document of a mortgage deed that a lender
can ascertain his rights over the property so claimed.

1.3 Need for a Mortgage deed

A mortgage deed is often required when a person is borrowing a loan and required to give his
property as a security and a collateral. It is through this legal document of a mortgage deed that
the rights and interest over a particular property can be secured. The need for a mortgage deed
arises in order to determine the parties, rights of the lender, investigation as to the interest and
title over the property, specific legal details of the agreement and it also acts as an evidence.
1.4 Common forms of mortgages
 Simple/ Registered mortgage – Section 58 (b)

According to this type of mortgage, a property can be mortgaged without delivering the actual
possession of the property in question. In the deed the mortgagor agrees that in case of failure of
repay the loan the mortgagee can exercise all rights over the property, this is inclusive of the
right to sell the property to recover the amount due.

 By deposit of the title deed – Section 58 (f)

According to the English Law, such type of mortgage is termed as ‘equitable mortgage.’ In this
type of mortgage there is a simple submission of document of title without any other form of
legal formality. There is an absence of law of registration. Section 58 (f) of the Transfer of
Property Act, 1882 mentions, “the notified towns specified by the State Government in the
official gazette, any person can deliver his title deeds of immovable property to the banks with
the intent to create security”.1 Such type of mortgages requires- a debt, intention and deposit of
title deed and certain territorial restrictions.

 Other types of mortgages

 Mortgage by Conditional Sale: the condition in this type of mortgage is that the property
will be returned to the real owner after the repayment money borrowed. 
 Usufructuary Mortgage: the possession of the property is transferred to the mortgagee.
 English Mortgage: under this property is transferred, the mortgagor is bound to pay the
money on a specified date as mentioned in the agreement.
 Anomalous Mortgage: any other form of mortgage or combination of the above-defined
mortgages.

1
Neha Malik, All you need to know about essentials of a mortgage deed, iPleaders, (2 nd March 2022, 9:30 am),
https://blog.ipleaders.in/essential-elements-of-mortgage-deed/#Most_common_forms_of_mortgages
1.5 Essential elements in a mortgage deed
 Parties

The mortgage deed must contain the names of the parties involved, i.e mortgagor and mortgagee.
It must important for the mortgagor to be competent enough according to the requirements of the
Indian Contract Act, 1872 to enter into the deed. However, the mortgagee can be a minor as well.

 Description of the deed

The title of the deed must be written in the following manner- “THE DEED OF MORTGAGE.”

 Details of property

According to this, all the material details of the property to be mortgaged must be specifically
mentioned. For example- the location of the property.

 Recital

These are the introductory statements that tell us about the intention of the parties to enter into a
contract. It can also be called a preamble containing basic characteristics of the agreement. It
starts as “Whereas the mortgagor has agreed” or “whereby the mortgagor has the rights”. 

 Habendum

This part deals with the quality or extent of interest of the parties involved. It mentions the rights
and restrictions that the mortgagee is going to have over the property.

 Covenant for repayment

This part of the deed mentions the conditions and clauses for the repayment of the loan. It is
inclusive of the tenure and consideration of repayment.
  Mortgage clause
This part tells us about the type of mortgage that parties have entered into. This is one of the
most important clauses of the mortgage deed since it talk about the rights and duties of the
parties involved.

 Possession

This clause tells us whether the mortgagor has the right to exercise any rights of possession
over the property. It also depends on the type of mortgage deed. For example- in a simple
mortgage the rights of possession over a property would remain with the mortgagor.

 Title deed
It deals with the kind of title to be transferred to the mortgagee. “If it is given in the clause
that all the title deeds related to the mortgaged property must be given to the mortgagee, then
the mortgagor shall transfer all the documents of the title deed to the mortgagee.”2

 Insolvency

There have been instances where the mortgagor has been declared insolvent. This portion of
the deed deals with the specific treatment to be made if the mortgagor has been declared
insolvent.

 Documents required

All the essential documents are specified in this part.

 Redemption clause

This deals with the tenure of the mortgage deed. When the principal and interest amounts are
paid, how is the mortgaged property supposed to go back to its real owner, this is what is
mentioned in this clause.

2
Supra note 1.
1.6 Position of Attestation and Stamp duty

It is relevant at this point to state that the mortgage deed shall be duly registered and a stamp
must be duly added in order to make it a valid legal document. For example, in a simple
mortgage deed, if the deed is not registered, stamped, duly signed and attested by two witnesses,
then in that case not valid contract would arise. The stamp fee that is to be paid depends upon the
location of the property.

1.7 Other important clauses

 Interest rate

One must be very cautious about the interest that is charged. Usually it is charged at a fixed rate,
but at other times it can vary. The mortgagee falsely benefits from such unfair interest rates,
therefore, one must carefully go through the clause of interest rate in order to save oneself from
any unfair practice of the mortgagee.

 Amendment clause

This particular clause goes against the interest of the mortgagor. This is so because it gives the
mortgagee the right to alter the deed of mortgage.

 Lease clause

Having prior permission of the mortgagee, it through this clause that the mortgagor can give out
the mortgage property in a lease format.

 Possession

This clause specifies if the possession of the property has to be given to the mortgagor. Legal
battles arise when this clause is not read properly.
1.8 Process of getting a mortgage

It is the business men and individuals who use the this concept of mortgage in order to buy real
estate without having to pay for the entire amount of money. The person who borrows the money
has to pay back the loan inclusive of the interest. If in any case the borrower fails to repay the
amount, then the lender is at the liberty to foreclose the property. “For example, a residential
buyer mortgages his or her home to their lender, who then has a claim on the property. If the
buyer defaults on their financial obligations, this protects the lender’s interest in the property. In
the event of a foreclosure, the lender has the option of selling the property and using the proceeds
to pay off the mortgage debt.”

1.9 Example of a mortgage deed

 Facts of the case. Mr. Varun is in a need of a loan worth Rs. 4,00,000 from Mr. Vritant. He
wishes to keep his property as a security against the loan from Vritant as mortgage. The loan
amount is to be given on 2nd June 2022.

DRAFT A MORTGAGE DEED

“This deed of mortgage dated, 02.05.2022 executed by Varun, son-in-law of David, aged 32
years residing at Sundar Nagar, H.No 250, Chennai (hereinafter called the mortgage) of the one
part and in favour of Vritant.

The mortgagor has borrowed a sum of Rs. 4,00,000 (Rupees four lakhs only). This day from the
mortgagor agreeing to repay the same with interest at 24% per annum to the mortgage or his
order on demand. The mortgage hereby offers the house property more fully described in the
schedule hereunder as security for the due repayment of the loan.

In the event of the mortgage failing to repay the loan as agreed upon, the mortgage shall be at
liberty to bring the schedule mentioned property to same, by filing a suit foreclosing the
mortgage and appropriate the same proceeds towards the belt.”
 Chapter 3: Important case laws

 “Prabhakaran and Ors Vs. M. Azhagiri Pillai (Dead) by Lrs. And Ors” 3. 

“In case of a usufructuary mortgage which does not fix any date for repayment money, but
merely stipulates that the mortgagee is entitled to be in possession till redemption, the right to
redeem would accrue immediately on execution of the mortgage deed and the mortgagor has to
file a suit for redemption within 30 years from the date of mortgage. Section 27 of the Limitation
Act, provides that at the determination of the period hereby limited to any person for instituting a
suit for possession of any papery his right to such property shall be extinguished this would mean
that on the expiry of the period of limitation prescribed under the Act, the mortgagor would lose
his right to redeem and the mortgagee would become entitled to continue in possession as the full
owner.”

 “Jaimal & others Vs. State of HP & others” 4

“The period of limitation for filing a suit for recovery of immovable property or redemption of
usufructuary mortgages which have not fixed any time for repayment of mortgage money is 30
years as prescribed under Article 61 to the Schedule to the Limitation Act, 1963.”

Conclusion

In order to conclude, it would be correct to mention that a mortgage deed is a legal document
containing all the terms and conditions of the loan advanced by the lender to the borrower. The
deed is inclusive of all the information of the loan. For example- the parties involved, the
property given as collateral, the loan amount, the interest rate, and more. It is extremely
important to read and understand the terms and conditions of the agreement. In order to make the
rightful use of the mortgage deed and to keep the legal battles at bay, the deed must be
understood and read properly.

3
2006 [2] CTC 412.
4
2012 [2] CTC 257.
 BIBLIOGRAPHY

1. WEBSITES
 https://blog.ipleaders.in/critical-analysis-mortgagors-right-redemption/
 http://www.legalservicesindia.com/article/1183/The-Deed-of-Mortgage.html
 https://www.legalbites.in/conveyance-mortgage-deed/
2. ARTICLES OR JOURNALS
 Turner, R. W. “An English View of Mortgage Deficiency Judgments.” Virginia
Law Review, vol. 21, no. 6, Virginia Law Review, 1935, pp. 601–10,
https://doi.org/10.2307/1066910.

 Chaplin, H. W. “The Story of Mortgage Law.” Harvard Law Review, vol. 4, no.
1, The Harvard Law Review Association, 1890, pp. 1–14,
https://doi.org/10.2307/1321129.