RIGHTS AND LIABILITIES OF PARTIES TO MORTGAGOR

(SECTION 60 – 65A)

RIGHTS AND LIABILITIES OF PARTIES TO MORTGAGEE

(SECTION 67 – 76)

PRESENTED BY:

CAROLINE S
JKT20009

LLB (3rd SEM)

 INTRODUCTION

• Mortgage is a term commonly used in transfer of property and it involves temporary transfer of property
against a loan which has to be re-transferred once the loan amount is paid off.
• Mortgage basically includes conveyance of property as security for the payment of debt or performance
of the duty and the conveyance becomes void once the debt is paid off by the debtor.
• Following legislation deal with mortgage:
• The Transfer of Property Act, 1882– Sections 58-104, which are mentioned in Chapter IV deals with the
significant part of mortgage.
• The Civil Procedure Code, 1908– The procedural part of mortgage of immovable property is dealt
in Chapter XXXIV of CPC.
• Indian Contract Act, 1872– Any contract related to mortgage and its general principles are mentioned in
the Indian Contract Act of 1872.
 PARTIES TO MORTGAGE

MORTGAGOR:
The person who has transferred the interest in a specific immovable property is known as mortgagor. 
MORTGAGEE:
The person to whom specific interest of immovable property is transferred is known as mortgagee.
MORTGAGE SUM:
The principal amount which is given as loan and the interest amount which mortgagor will pay to
mortgagee along with the principal amount. Sum of both the principal amount and interest is known as
mortgage-money. 
 WHEN DO RIGHTS & LIABILITIES OF A
MORTGAGOR ARISE?
• The rights and liabilities of a mortgagor arise during a mortgage. A loan may be secured or unsecured.

•  Section 58(a) of transfer of property Act 1882, has defined mortgage as the transfer of an interest in a
specific immovable property for securing:
 The payment of money given to him or to be given through loan, or

 An existing or future debt, or

 The performance of an engagement which may give rise to a pecuniary liability.

 RIGHTS OF MORTGAGOR
Following are the rights given to a mortgagor given by the Transfer of Property Act, 1882:
• Right to redemption (Section 60)
• Right to transfer mortgaged property to a third party instead of retransferring (S. 60A)
• Right of inspection and production of documents (Section 60B)
• Right to recover the possession (Section 62)
• Right to accession (Section 63)
• Right to improvements (Section 63A)
• Right to a renewed lease (Section 64)
• Right to grant a lease (section 65A)
 RIGHT TO REDEMPTION (SECTION 60)
It is one of the most important rights of a mortgagor given under section of the Act. This right puts an end to mortgage by returning
the property of mortgagor. The right to redeem further grants three rights to the mortgagor are:

• Right to end mortgage deal

• Right to transfer mortgaged property to his name

• To take back possession of property in case of delivery of possession

CASE:

• Noakes & Co. vs. Rice (1902), decided by United Kingdom house of Lords, there was a condition in the mortgage deed that the
mortgagor will sell all the beer brewed on his land to the mortgagee. The Court held that such a condition was valid during the
existence of the mortgage, but after the property has been redeemed, such condition would not be valid. The property should be
returned to the mortgagor without any tie. Further it was held that “Once a mortgage is always a mortgage and nothing but a
mortgage”

• Stanley v. Wilde, (1899 2 Ch 474) It was held that a mortgage means transferring the interest in an immovable property to a third
party as security for the loan that the party has advanced. The security is redeemable by the transferor when he pays back the loan
or discharges his obligation.
 RIGHT TO TRANSFER TO THE THIRD PARTY INSTEAD OF
TRANSFERRING IT TO MORTGAGOR
(SECTION 60A)

• This right was added in the Act by Amendment Act of 1929.

• This right provides the mortgagor with authority to ask the mortgagee to assign the mortgage debt
and transfer the property to a third person directed by him.

• The purpose of this right is to help the mortgagor to pay off the mortgagee by taking a loan from a
third person on the same security.
 RIGHT TO INSPECTION AND PRODUCTION OF
DOCUMENTS (SECTION 60B)

• This section is also inserted by the Amendment Act of 1929.

• It is the right of mortgagor to ask mortgagee for the production of copies of documents of the
mortgaged property in his possession for inspection on notice of reasonable time.

• The expenses incurred on production or copies of documents or travel expenses of a mortgagee are
to be paid by the mortgagor.

• This right is available to the mortgagor only as long as his right to redeem exists.
 RIGHT TO RECOVER POSSESSION
(SECTION 62)
• This section provides the right to Usufructuary mortgagor that he can recover the possession of
the mortgaged property along with the mortgage deed entered by him on the condition if he has
paid the principal amount of loan or on the expiry of the prescribed time stated for the payment
of mortgage amount.

• K Variath v. PCK Haji (1974) 1 SCC 590, it was held by the Apex Court that the Usufructuary
mortgagor was not entitled to recover his possession of the mortgaged property just on the basis
of an oral mortgage as there was no legit proof for registration of the transfer but it was open for
the mortgagor to recover the possession on the merits of his title of property.
 RIGHT TO ACCESSION (SECTION 63)
• Basically, accession means any addition to property. According to this right mortgagor is entitled to
such accession to his property which is in the custody of mortgagee.

• There are two types of accession:

• ARTIFICIAL ACCESSION:

It is when mortgagor made some efforts and it increased the value of land. 

• NATURAL ACCESSION:

The name itself defines i.e. without any man-made efforts.

 RIGHT TO IMPROVEMENTS (SECTION 63A)
• According to this right if the mortgaged property has been improved while it was in possession of
mortgagee, then on redemption and in the absence of any contract to the contrary mortgagor is
entitled to such improvement.

• The mortgagor is not liable to pay mortgagee unless:

• Improvements made by the mortgagee were to protect the property or with the prior permission
of mortgagor.
• Improvements were made by the mortgagee with the permission of the public authority.   
 RIGHT TO RENEWED LEASE (SECTION 64)
• In case the mortgagor has entitled a leasehold property as the mortgaged property and during the
duration of the mortgage, the lease is renewed then on redemption of the property the mortgagor
shall be eligible for the benefits of the renewed lease and this right is available to the mortgagor
unless he enters into any contract which is contrary to this condition with the mortgagee.
 RIGHT TO GRANT LEASE (SECTION 65A)
Post the amendment the mortgagor was allowed to grant a lease of the mortgaged property if he has the
possession of that property subject to the following conditions;

• The conditions of the lease should be as per the local laws and customs to avoid any further fraudulent
transaction.

• No rent or premium shall be paid prior by the mortgagee.

• The contract cannot contain any provision with regard to renewal of lease.

• Every such lease shall be enforced within a period of 6 months from the date of execution of the lease.

• The term of the lease should not be more than 3 years in total where the mortgaged property is a
building.
 DUTIES/LIABILITIES OF A MORTGAGOR

• Duty to avoid waste (Section 66)

• Duty to indemnify for defective title (Section 65)

• Duty to compensate mortgagee (Section 65(c))

• Duty to direct rent of a lease to mortgagee (Section 65(d))

 DUTY TO AVOID WASTE (SECTION 66)
• This section imposes a duty on the mortgagor to not to commit any act which leads to the waste of
property or any act which reduces the value of the mortgaged property.
• Waste is divided into two categories:
PERMISSIVE WASTE:
A mortgagor who is in possession of the mortgaged property is not liable to the mortgagee for any
minor waste.
ACTIVE WASTE:
When an act is done which causes major waste of the property or leads to the reduction in the value
of mortgaged property, then the mortgagor will be liable to the mortgagee.
 DUTY TO INDEMNIFY FOR DEFECTIVE
TITLE (SECTION 65)

• It is the duty of a mortgagor to compensate the mortgagee for a defective title in the mortgaged
property.

• A defective title refers to a situation when a third party starts claiming or interferes with
mortgaged property.

• It is a liability for the mortgagor to compensate for the expenses incurred by mortgagee for
protecting the title of that property.
 DUTY TO COMPENSATE MORTGAGEE
(SECTION 65C)

• If the mortgaged property is in possession of mortgagee who is paying all the taxes and other
public charges, then it is the duty of mortgagor to compensate mortgagee for incurring such
expenses.

• Similarly, when there is no delivery of possession i.e. the mortgaged property is still in
possession of mortgagor, then it is his duty to pay all public charges and taxes levied on it.
 DUTY TO DIRECT RENT OF A LEASE TO
MORTGAGEE (SECTION 65D)

• Where the mortgaged property is leased by mortgagor then it is his duty to direct lessee to pay
the rent, etc. to the mortgagee.
 RIGHTS OF MORTGAGEE

Following are the rights given to a mortgagee given by the Transfer of Property Act, 1882:
• Right to Foreclosure (section 67)
• Right to sue for mortgage money (section 68)
• Power to sale when valid (section 69)
• Right to accession (section 70)
• Right to renewal of lease (section 71)
• Right of the Mortgagee to spend money on mortgage property (section 72)
• Right to proceeds of revenue sale or compensation on acquisition
 RIGHT TO FORECLOSURE
(SECTION 67)
• The two pivotal rights that terminate a mortgage are the right to foreclosure and the right to
redemption where both the rights are co-extensive despite the fact that the former is provided for
the Mortgagee and the latter is for Mortgagor.

CONDITIONS:
• Money must be due for payment
• The mortgage deed should not contain any clause that waives the Mortgagee’s right to foreclosure.
• The decree of redemption should not be obtained by the Mortgagor prior to this claim.
K. Vilasini v. Edwin Periera (AIR 2009 SC 104) it was held that an order permitting foreclosure can
only be passed upon ascertaining the nature of the mortgage and the parties’ right under it.
 RIGHT TO SUE (SECTION 68)

The following are circumstances, under which a Mortgagee can sue for mortgage money;

• Default in repayment

• Destruction of the mortgaged property

• Insufficient security

• Deprivation of security

• Non-delivery of the possession

• Securance of the possession

 RIGHT TO SELL (SECTION 69)
Mortgagee is authorized to sell the mortgaged property after the repayment becomes due, but this
right is limited to the following three cases:

• Where the mortgage is an English mortgage i.e. parties to the mortgage do not belong to the
community of Hindu, Muslim, or any other race or sect notified by the state government.

• Where the Mortgagee is government, and such Mortgagee’s power of sale without the intervention
of the court has conferred by an express provision of the mortgage deed.

• Where the mortgaged property is situated at Madras, Calcutta, Bombay, or any other towns
specified in the official government gazette.

Saraswati Bai v. Vardarajan Naicker (1955 Mad. 1310) held that the power of sale of the mortgagee
will not affect the ordinary right of realization of suit.
 RIGHT TO ACCESSION
• Section 70 of the Act provides that the
mortgagee is entitled to avail the accession
made to the mortgaged property after the
mortgage date.
• Again, this right will be shunned following the
prevalence of a contract to the contrary.
RIGHT TO RENEWED LEASE
• Section 71 says if the Mortgagor obtains a
renewal of the lease since the mortgaged
property is a leasehold property.
• The Mortgagee has entitled to take benefits of
the new lease as the property is still in his
possession, and the Mortgagor has not
redeemed it yet.
 RIGHT TO PROCEEDS OF REVENUE
SPEND MONEY ON MORTGAGE
SALE OR COMPENSATION ON
PROPERTY
ACQUISITION

• If Mortgagee happened to spent on the • The Mortgagee has the right to claim for the
mortgaged property so as to preserve it from mortgage money, wholly or partly, if the
destruction or for other reasons given Mortgagor had failed to settle the payment
under Section 72, backlogs by means of Revenue arrears, rent

• He may add such expenses to the principal due, or other charges attached to the
mortgaged property.
money at the same rate of interest.

• In the absence of a fixed rate of interest, it is

payable at the rate of 9% per annum.
 LIABILITIES/ DUTIES OF MORTGAGEE
(SECTION 76)
• Duty to maintain the mortgaged property.

• Duty to collect the profits associated with the property.

• Duty to pay government dues with the generated income from the property unless there is
a contract to the contrary.

• Duty to take necessary measures with his entire endeavor to keep the property undamaged.

• Duty to keep records of the revenue and expenditure of the property.

• Duty to carry out urgent and necessary repairs of the property.

 CONCLUSION

The Transfer of the Property Act is one collective and codified law that espoused the concept of
conveyance of property. 

By the virtue of this Act, the transfer of immovable property from one person to another has made
more righteous and just devoid of deception.

Thereby, the parties taking part in the transaction have been provided with certain rights and
liabilities, specifically in a mortgage, both the parties i.e. Mortgagor and Mortgagee have to abide
by the provisions of mortgage deed and Transfer of Property Act as well.

The legislative intent of this Act is to proscribe the commission of fraud on transactions.
THANKYOU