UNIT — III

 Definition- Kinds of mortgages and their features-

features
 Rights and liabilities of mortgagor and mortgagee-
 Priority of securities-Marshalling
securities and contribution
 Charge
Sec. 58. “Mortgage”, “mortgagor”, “mortgagee”, “mortgage-money”
“mortgage and
“mortgage-deed” defined.—(a) A mortgage is the transfer of an interest in specific
immoveable property for the purpose of securing the payment of money advanced or
to be advanced by way of loan, an existing or future debt, or the performance of an
engagement which may give rise to a pecuniary liability.

The transferor is called a mortgagor,, the transferee a mortgagee; the principal money and
interest of which payment is secured for the time being arc called the mortgage mone
and the instrument (if
if any) by which the transfer is effected is called a mortgage-deed
Analysis of Sec. 58(a) / Essentials of Mortgage:

 There must be a transfer of interest,

interest not a title.

 The transfer of an interest in some specific immovable property.

 The transfer is to secure the payment of any debt, or performance of any engagement
which is having a monetary liability (the purpose of the mortgage is to secure debt).

 Bhaskar Woman v. Narayan Rambilas Agarwal, 1960 SC- if words are not clear,
regarding the nature of the transaction, the intention & circumstance will be
considered to explain the true nature of the deed.
 Simple
mortgage

Mortgage by
Anomalous
conditional
mortgage
sale

Mortgage

Mortgage by
Usufructuary
deposit of
mortgage
title-deeds

English
mortgage
(b) Simple mortgage.—Where, without delivering possession of the mortgaged property,

the mortgagor binds himself personally to pay the mortgage-money, and agrees, expressly
or impliedly, that, in the event of his failure to pay according to his contract, the
mortgagee shall have a right to cause the mortgaged property to be sold and the
proceeds of sale to be applied, so far as may be necessary, in payment of the mortgage
money, the transaction is called a simple mortgage and the mortgagee a simple
mortgagee.
Essentials of Simpal Mortgage:

1. Personal obligation to Pay loan

2. The possession and the title deeds will be with the mortgagor

3. Simpal Mortgage can be made only through the registered deed.

4. If non-payment of the loan the mortgagor has the right to sell the mortgaged
property through the intervention of the court.
court

5. After-sale
sale he can get the principal with interest, the remaining amount must be given
back to the mortgagor.
(c) Mortgage by conditional sale.—Where
Where the mortgagor ostensibly sells the mortgaged
property— on condition that on default of payment of the mortgage money on a certain da
the sale shall become absolute,, or on condition that on such payment being made the sale
shall become void,, or on condition that on such payment being made the buyer shall
transfer the property to the seller, the transaction is called a mortgage by conditional sale
and the mortgagee a mortgagee by conditional sale:
sale

 Provided that no such transaction shall be deemed to be a mortgage unless the conditio
is embodied in the document which effects or purports to effect the sale.
Essentials of Mortgage by conditional sale:

1. There is an ostensible sale of the immovable property to secure

s the loan amount.

2. After-sale property does not Vest in the buyer.

3. Conditions must be in the same document.

document

4. If mortgage money is 100 Rs. Or more the document must be registered.

5. On the payment of the mortgage money, the sale shall become void, and on the non-
payment of the mortgage money the sale would become absolute.
 Tulsi v. Chandrika Prasad, 2004, SC-- There was a transaction of property with the
condition that the property will return on the payment of loan amount, Held it is a
Mortgage by conditional sale and not a sale.

 Gauri Shankar Prasad v. Brahama Nand Singh, 2008, SC-

SC Condition must be
incorporated in the same document,, otherwise it is not Mortgage by conditional sale.
(d) Usufructuary mortgage.—Where
Where the mortgagor delivers possession or expressly or by
implication binds himself to deliver possession of the mortgaged property to the mortgagee a
authorises him to retain such possession until payment of the mortgage-money, and to receive
the rents and profits accruing from the property or any part of such rents and profits and to
appropriate the same in lieu of interest,, or in payment of the mortgage-money, or partly in lie
of interest or partly in payment of the mortgage-money,
mortgage the transaction is called an
usufructuary mortgage and the mortgagee a usufructuary mortgagee.
mortgagee
Essentials of Usufructuary mortgage:

1. There is the delivery of possession of the mortgaged property by the mortgagor to the
mortgagee.

2. The mortgagee will enjoy the usufruct of the property until his dues are paid.

3. No personal liability of the Mortgagor, the mortgagee can retain possession and enjoy
the usufruct until nonpayment of the loan.

4. No right of the mortgagee to sell the mortgaged property.

5. The mortgagee is entitled to receive rent and profits accruing from the mortgaged
property till the money is repaid.
5. The mode to appropriate the rents and profits depends on the terms of the mortgage dee
Such rents and profits or part of the rents and profits may be appropriated:

i. In lieu of interest,

ii. In lieu of principal, or

iii. In lieu of principal and interest

6. The time to repay the amount is uncertain.

uncertain

7. If mortgage money is 100 Rs. Or more the document must be registered.

(e) English mortgage.—Where the mortgagor binds himself to repay the mortgage money o
a certain date and transfers the mortgaged property absolutely to the mortgagee, but subject
a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage money a
agreed, the transaction is called an English mortgage.
mortgage

Essentials of English mortgage

1. Personal liability to Pay the amount on a certain date.

2. The mortgagor absolutely transfers the mortgaged property to the mortgagee.

3. The transfer needs to be subject to a proviso that the mortgagee will transfer the property
the mortgagor upon payment of mortgage money on the agreed date.
4. If mortgage money is 100 Rs. Or more the document must be registered.

5. In case of default by the mortgagor, the mortgagee can sell the mortgaged property and
recover the amount.

 Raj Kishore v. Prem Singh 2011, SC-- Mortgager did not bind himself to repay the
mortgage money on a certain date. No clause to return the property. It is not an English
Mortgage, it is a sale.
(f) Mortgage by deposit of title-deeds
deeds—Where a person in any of the following towns,
namely, the towns of Calcautta,, Madras, and Bombay,
Bombay and in any other town which the
State Government concerned may, by notification in the Official Gazette, specify in this
behalf, delivers to a creditor or his agent documents of title to immoveable property, with
intent to create a security thereon, the transaction is called a mortgage by deposit of title-
deeds.
Essentials of Mortgage by deposit of title-deeds:
title

1. There must be a debt: the mortgage has to take a sudden loan and have no time to complet
the formalities

2. Deposit/delivery of the title: with an intention to secure debt is enough.

 Janakiram v. State, 2006, SC- an equitable mortgage created by deposit of documents othe
than the title of the property is not a valid Mortgage by deposit of title-deeds.

3. Intention to create security for the debt:

 K. J. Nathan v. Maruthi, 1965, SC- Intention

ntention to create security by depositing of title deed
a question of fact and not of law.
4. Territorial restrictions :

5. Remedy in default of repayment: file a suit for the sale of the mortgaged property. (must
be filed within 12 years from the date on which the money become due.)

6. Registration is not needed.

(g) Anomalous mortgage —A
A mortgage that is not a simple mortgage, a mortgage by
conditional sale, a usufructuary mortgage, an English mortgage, or a mortgage by deposit
of title deeds within the meaning of this section is called an anomalous mortgage.

 It is a Customary or a combination of other forms of Mortgage

Rights of the Mortgagor – Sec 60 - 64

 Right of Redemption ( Sec 60)

 Right of inspection and production of the documents relevant to the transaction of

mortgage (Sec 60 B)

 Right to redeem the mortgaged property separately or simultaneously. (Sec 61)

 Right of the Usufructuary mortgagor to recover Possession (Sec 62)

 Right to appropriate the accession if any, to the mortgaged property. (Sec 63)

 Right to appropriate improvements.

improvements (Sec 63A)

 Right to renew the lease (Sec 64)

Sec. 60. Right of mortgagor to redeem— —At any time after the principal money has become
due, the mortgagor has a right, on payment or tender,
tender at a proper time and place, of the
mortgage money, to require the mortgagee
(a) to deliver to the mortgagor the mortgage deed and all documents relating to the mortgage
property which are in the possession or power of the mortgagee
(b) where the mortgagee is in possession off the mortgaged property, to deliver possession
thereof to the mortgagor, and
(c) at the cost of the mortgagor either to re--transfer the mortgaged property to him or to such
third person as he may direct or to execute and (where the mortgage has been effected by
registered instrument) to have registered an acknowledgment in writing that any right in
derogation of his interest transferred to the mortgagee has been extinguished:
 Provided that the right conferred by this section has not been extinguished (destroy) by th
act of the parties or by decree of a Court.
 The right conferred by this section is called a right to redeem, and a suit to enforce it is
called a suit for redemption.

 Nothing in this section shall be deemed to render invalid any provision to the effect that a
the time fixed for payment of the principal money has been allowed to pass or no such
time has been fixed. the mortgagee shall be entitled to reasonable notice before payment
tender of such money.
 Redemption of portion of the mortgaged property.—Nothing
property in this section shall enti
a person interested in a share only of the mortgaged property to redeem his own share on
on payment of a proportionate part of the amount remaining due on the mortgage, except
only where a mortgagee, or, if there are more mortgagees than one, all such mortgagees,
have or have acquired, in whole or in part, the share of a mortgager.
 “Once a Mortgage is always a Mortgage”

• Under the English principle of “the Equity of Redemption” that operates against common
law which provided that if the mortgagor fails to pay the debt with interest within the
stipulated period the mortgagee will become the absolute owner of the property. Accordi
to Equity Principal- “Once a Mortgage is always a Mortgage”

• It is a well-established
established principle that no contract between the mortgagor and the mortgag
which was entered into at the time of the mortgagers was valid if it prevented the
mortgagors right of calling back his property on repayment.

• The maxim means that a transaction that at once is a mortgage could not cease to be so b
having any stipulation in the mortgage deed calculated to prevent the right of redemption
• Where a transaction is intended by the parties to be a borrowing transaction under a
mortgage, though it is carried out in the form of a sale, equity will not allow the mortgago
to be deprived of his right of redemption.
 Clog
log on redemption

• A clog on redemption - any stipulation or provision in the mortgage deed which

restricts the mortgagor’s right of redemption.

• Law of Equity does not permit any clog on redemption.

• It is condition which prevents the mortgagor from redeeming the mortgage

property on payment of the loan.

• A clog on the equity of redemption is void In India.

• Under Indian law, the mortgagor is having the right of redemption of his property.

• Any
ny contract by mutual agreement between parties that is against its provision cannot be
considered void.

• The condition or stipulation must be incorporated in the mortgage deed itself.

• The condition or the stipulation incorporated in the deed must not be unreasonable, again
public policy, and with malafide intention.

• The condition or the stipulation is either absolute restriction on the mortgagor’s right of
redemption or prevents him from redeeming the mortgage.
 Instances of Clog

• Sale of property in default of payment.

• Restraint on alienation of the property.
• Interest in the property after redemption.
• Penalty in case of default in payment of mortgage debt
Essentials of Sec. 60 :
1. On payment of mortgaged money mortgagee must deliver the mortgage deed & all
documents of property which are in possession of the mortgagee.

2. Possession must also be transferred

3. If the mortgage is done by registered deed,

deed a registered document to acknowledge
that all the rights of the mortgage will end from the date.

4. If the mortgager directs to return the property to a third party then it must be done
accordingly.

5. Before every payment or expiry of the time fixed to pay money Mortgagee must ge
the notice.
Mortgager may exercise his right of redemption by:
1. By repaying the amount at the proper time, place & manner
2. By depositing mortgage money in court
3. By filling a Suit for Redemption:
Sec. 60A. Obligation to transfer to a third party instead of retransference to the
mortgagor.—

(1)Where
)Where a mortgagor is entitled to redemption, then, on the fulfillment of any conditions
the fulfillment of which he would be entitled to require a re-transfer,
re he may require the
mortgagee, instead of re-transferring the property, to assign the mortgage-debt
mortgage and transfer
the mortgaged property to such third person as the mortgagor may direct; and the mortgage
shall be bound to assign and transfer accordingly.
(2)) The rights conferred by this section belong to and may be enforced by the mortgagor o
by any encumbrancer notwithstanding an intermediate encumbrance: but the requisition o
any encumbrancer shall prevail over a requisition of the mortgagor and, as between
encumbrancers, the requisition of a prior encumbrancer shall prevail over that of a
subsequent encumbrancer.

(3)) The provisions of this section do not apply in the case of a mortgagee who is or has be
in possession.
Sec. 60 B. Right to inspection and production of documents.—A
documents mortgagor, as long as
his right of redemption subsists, shall be entitled at all reasonable times, at his request and
his own cost, and on payment of the mortgagee’s costs and expenses in this behalf, to
inspect and make copies or abstracts of, or extracts from, documents of title relating to the
mortgaged property which arc in the custody or power of the mortgagee.

 Added by the 1929 Amendment.

Sec. 61. Right to redeem separately or simultaneously.—A
simultaneously mortgagor who has executed tw
or more mortgages in favor of the same mortgagee shall, in the absence of a contract to the
contrary, when the principal money of any two or more of the mortgages has become due, be
entitled to redeem any one such mortgage separately, or any two or more of such mortgages
together.

Essentials
1. mortgage in favor of the same mortgagee.
mortgagee
2. The
he principal money of any two or more of the mortgages has become due.
3. No contract to the contrary
4. Can redeem any one such mortgage separately,
separately or any two or more of such mortgages
together.
Sec. 62. Right of usufructuary mortgagor to recover possession—In
possession the case of a
usufructuary mortgage, the mortgagor has a right to recover possession of the property
together with the mortgage deed and all documents relating to the mortgaged property whic
are in the possession or power of the mortgagee —
(a) where the mortgagee is authorised to pay himself the mortgage money from the rents an
profits of the property.—when such money is paid:
paid

(b) where the mortgagee is authorised to pay himself from such rents and profits or part
thereof a part only of the mortgage money,—.when
money, the term (if any), prescribed for the
payment of the mortgage money has expired and the mortgagor pays or tenders to the
mortgagee the mortgage-money or the balance thereof or deposits it in Court as hereinafter
provided.
 Essentials: Right to recover Possession arises-

1. After payment of the principal amount, where the mortgagee was to adjust interest fro
the rents and profits of the property.

2. Upon the expiry of the term prescribed for the payment of the mortgage money and th
mortgagor either pays or renders
enders to pay the balance.

 Singh Ram v. Shev Ram, 2014, SC- Right to get all rights over property arise only aft
payment of mortgage money, a mere mortgage for a long duration does not extinguish
the right of the mortgagor to get his property back.
Sec. 63 Accession to mortgaged property:
property Where the mortgaged property in possession of
the mortgagee has, during the continuance of the mortgage, received any accession, the
mortgagor,, upon redemption, shall, in the absence of a contract to the contrary, be entitled as
against the mortgagee to such accession.
Accession acquired in virtue of transferred ownership.—Where
ownership such accession has
been acquired at the expense of the mortgagee,
mortgagee and is capable of separate possession or
enjoyment without detriment to the principal property,
property the mortgagor desiring to take the
accession must pay the mortgagee the expense of acquiring it. If such separate possession o
enjoyment is not possible, the accession must be delivered with the property; the mortgagor
being liable, in the case of an acquisition necessary to preserve the property from destructio
forfeiture, or sale, or made with his assent, to pay the proper cost thereof, as an addition to t
principal money, with interest at the same rate as is payable on the principal, or, where no
such rate is fixed, at the rate of nine percent per annum.
 In the case last mentioned the profits,, if any, arising from the accession shall be credite
to the mortgagor.

 Where the mortgage is usufructuary and the accession has been acquired at the expense
of the mortgagee,, the profits, if any, arising from the accession shall, in the absence of
contract to the contrary, be set off against interest, if any, payable on the money so
expended.
 Accession means any kind of addition to the property which values the property.

 Accession is of two kinds:

1. Natural Accession: which arises with the course of nature. ( area of property increases wit
the change of course of the river).

 Mortgager will be entitled to get the additional property at the time of redemption.

2. Acquired Accession: It can be of two kinds-

kinds
a. Separable Accession: if possible be separated Mortgager will get the additional propert
after payment of cost of the accession at the time of redemption.

 To get Accession, Mortgager needs to pay.

b. Inseparable Accession: If accession is necessary to preserve the destruction of the
property or accession was made with the consent of the mortgagor – then the mortgagor
has to pay at the time of redemption.

 Kallu v. Ganesh, 1929, All.- Renovation of the house was not necessary to preserve i
not made with the consent of the mortgagor so the mortgagor is not liable to pay
expenses for it.

 Mortgagor has to pay the actual cost & the interest decided in the contract.

 But if interest is not decided the interest will be 9 % per annum.

Sec. 63A. Improvements to mortgaged property.—
property

1)) Where mortgaged property in possession of the mortgagee has, during the continuance of
the mortgage, been improved, the mortgagor,
mortgagor upon redemption, shall, in the absence of a
contract to the contrary, be entitled to the improvement;
improvement and the mortgagor shall not save onl
in cases provided for in sub-section (2),
), be liable to pay the cost thereof.
 2)Where
)Where any such improvement was effected at the cost of the mortgagee and was
necessary to preserve the property from destruction or deterioration or was necessary t
prevent the security from becoming insufficient,
insufficient or was made in compliance with the
lawful order of any public servant or public authority,
authority the mortgagor shall, in the
absence of a contract to the contrary, be liable to, pay the proper cost thereof as an
addition to the principal money with interest at the same rate as is payable on the
principal, or, where no such rate is fixed, at the rate of nine percent. per annum, and th
profits,, if any, accruing by reason of the improvement shall be credited to the mortgag
 Added with the 1929 Amendment.

 The mortgagor has to pay the cost of improvements in the following circumstances:

1. when the improvements made were necessary to preserve the property from
destruction or deterioration.

2. when the improvement is made in compliance with the law.

Sec. 64. Renewal of mortgaged lease.—
—Where the mortgaged property is a lease , and the
mortgagee obtains a renewal of the lease, the mortgagor, upon redemption, shall, in the
absence of a contract by him to the contrary, have the benefit of the new lease.

 When the mortgagee himself gets the lease renewed, then the mortgagor is entitled to g
back the leasehold mortgaged property.
property
 Liabilities /Duties of Mortgagor Sec 65-
65 66

Sec. 65. Implied contracts by mortgagor.—In

mortgagor the absence of a contract to the contrary, th
mortgagor shall be deemed to contract with the mortgagee,—
mortgagee,
(a) that the interest that the mortgagor professes to transfer to the mortgagee subsists, and th
the mortgagor has the power to transfer the same;
(b) that the mortgagor will defend,, or, if the mortgagee be in possession of the mortgaged
property, enable him to defend, the mortgagor’s title thereto;

(c)) that the mortgagor will, so long as the mortgagee is not in possession of the
mortgaged property, pay all public charges accruing due in respect of the property;
(d) and, where the mortgaged property is a lease,
lease that the rent payable under the lease, the
conditions contained therein, and the contracts binding on the lessee have been paid,
performed, and observed down to the commencement of the mortgage; and that the
mortgagor will, so long as the security exists and the mortgagee is not in possession of the
mortgaged property, pay the rent reserved by the lease, or, if the lease be renewed, the
renewed lease, perform the conditions contained therein and observe the contracts binding o
the lessee, and indemnify the mortgagee against all claims sustained by reason of the non-
non
payment of the said rent or the non-performance
performance or non-observance of the said conditions a
contracts;
(e)) and, where the mortgage is a second or subsequent incumbrance on the property, that
the mortgagor will pay the interest from time to time accruing due on each prior incumbran
as and when it becomes due, and will at the proper time discharge the principal money due
such prior incumbrance.

The benefit of the contracts mentioned in this section shall be annexed to and shall go with
the interest of the mortgagee as such, and may be enforced by every person in whom that
interest is for the whole or any part thereof from time to time vested.
 Subject to the contract to the contrary every mortgagor is deemed to have the followin
agreements:

1. Agreement for title: it is an implicit agreement to the mortgagee, and has the right to
transfer the interest.

2. Agreement for the defence of the title:

title mortgager has a duty to defend the title during
the mortgage, or to help the mortgager to defend by providing all documents and cos

3. Agreement
greement for payment of public charges:
charges mortgagor have a duty to pay all revenue,
taxes, & other public charges on property.
5. Agreement for payment of rents: if the mortgage is by way of lease, the mortgagor has t
pay its rent timely.

6. Agreement
greement for discharge of prior mortgage:
mortgage if any(subsequent liability)
Sec. 66. Waste by mortgagor in possession.—A
possession mortgagor in possession of the
mortgaged property is not liable to the mortgagee for allowing the property to deteriorate;
but he must not commit any act which is destructive or permanently injurious thereto if
the security is insufficient or will be rendered insufficient by such act.
 Rights of the Mortgagee Sec. 67 – 73

 Rights of the foreclosure or sale of the mortgaged property in default of non-payment

non
the debt. (Sec 67)

 Right to sue mortgagor for recovery of mortgage money. (Sec 68)

 Right to exercise the power of sale if given under the mortgage deed. (Sec 69)

 Right to get receiver appointed.. (Sec 69A)

 Right to appropriate accession to the mortgaged Property (Sec 70)

 Right to have the benefit of renewed lease,

lease if mortgaged property is leasehold. (Sec 71
 Right to spend money in preserving the property,
property defending mortgagors title or in
renewal of lease if the property is in his possession. (Sec 72)

 Right to receive proceeds of revenue sale (or compensation on acquisition ) of the

mortgaged property. (Sec 73)

67. Right to foreclosure or sale—In
In the absence of a contract to the contrary, the mortgage
has, at any time after the mortgage money has become due to him, and before a decree has
been made for the redemption of the mortgaged property, or the mortgage money has been
paid or deposited as hereinafter provided, a right to obtain from the Court a decree that the
mortgagor shall be absolutely debarred of his right to redeem the property or a decree that th
property be sold.

 A suit to obtain a decree that a mortgagor shall be absolutely debarred of his right to
redeem the mortgaged property is called a suit for foreclosure.
 Nothing in this section shall be deemed

(a) to authorise any mortgagee, other than a mortgagee by conditional sale or a mortgagee
under an anomalous mortgage by the terms of which he is entitled to foreclose, to institute a
suit for foreclosure, or a usufructuary mortgagee as such or a mortgagee by conditional sale
such to institute a suit for sale; or

(b) to authorise a mortgagor who holds the mortgagee's rights as his trustee or legal
representative, and who may sue for a sale of the property, to institute a suit for foreclosure;

(c) to authorise the mortgagee of a railway, canal or other work in the maintenance of which
the public are interested, to institute a suit for foreclosure or sale;
sale or
 (d) to authorise a person interested in part only of the mortgage money to-institute a su
relating only to a corresponding part of the mortgaged property, unless the mortgagees
have, with the consent of the mortgagor,
mortgagor severed their interests under the mortgage.
Analysis:

1. Foreclosure - closing or withdrawing the mortgagor’s right of redemption of the

mortgaged property.

2. This is the counterpart of the right of redemption.

3. This is not the absolute right, it is subject to the contract to the contrary.

4. This right is available at any time after the mortgage money has become due.

5. If it is a mortgage with a conditional sale,

sale or it is an anomalous mortgage then the
mortgagee can file a suit for Foreclosure,
Foreclosure and if it is a usufructuary mortgage or
mortgage with a conditional sale he can file a suit for sale.
5. If the mortgagor is a trustee of the mortgagee or legal representative then the mortgagor
can not file a suit for foreclosure, but he can file a suit for sale.

6. If any public property is mortgaged then, an absolute prohibition on foreclosure or sale,

then the mortgagee can appoint a receiver of these undertakings so as to discharge the debt.

7. If a property is mortgaged to more than one mortgagee every one is having a separate
portion of the property, then no one can foreclose or sell their portion. Mortgagee can sell o
foreclose their portion only if every mortgagee separated his shares with the consent of the
mortgagor.
 Type of Mortgage Remedy

Simple Mortgage Suit for the sale of the Mortgaged Property

Mortgage by Conditional Sale Suit for Foreclosure

Sale of the Mortgaged Property

English Mortgage

Mortgage by the deposit of title Suit for the sale of the mortgaged
deeds Property

depends on the conditions and combinations

Anomalous Mortgage
of mortgage
Sec. 67A. Mortgagee when bound to bring one suit on several mortgages—A
mortgagee who holds two or more mortgages executed by the same mortgagor in respect
of each of which he has a right to obtain the same kind of decree under section 67, and
who sues to obtain such decree on any one of the mortgages,
mortgages shall, in the absence of a
contract to the contrary, be bound to sue on all the mortgages in respect of which the
mortgage-money has become due.

 Consolidated Suit for all the mortgages to get remedy under section 67.

 Added by the 1929 Amending Act

Sec. 68. Right to sue for mortgage money.—(1)
money The mortgagee has a right to sue for the
mortgage money in the following cases and no others, namely:—
(a) where the mortgagor binds himself to repay the same;
(b) where, by any cause other than the wrongful act or default of the mortgagor or
mortgagee, the mortgaged property is wholly or partially destroyed, or the security is
rendered insufficient within the meaning of section 66, and the mortgagee has given the
mortgagor a reasonable opportunity of providing further security enough to render the who
security sufficient, and the mortgagor has failed to do so;
(c) where the mortgagee is deprived of the whole or part of his security by or in consequen
of the wrongful act or default of the mortgagor;
mortgagor
(d) where the mortgagee is entitled to possession of the mortgaged property, the mortgagor fai
to deliver the same to him, or to secure the possession thereof to him without disturbance by t
mortgagor or any person claiming under a title superior to that of the mortgagor:
Provided that, in the case referred to in clause (a),
( a transferee from the mortgagor or from his
legal representative shall not be liable to be sued for, the mortgage money.
(2) Where a suit is brought under clause (a)) or clause (b)
( of sub-section (1), the Court may, at
its discretion, stay the suit and all proceedings therein, notwithstanding any contract to the
contrary, until the mortgagee has exhausted all his available remedies against the mortgaged
property or what remains of it, unless the mortgagee abandons his security and, if necessary, r
transfers the mortgaged property
Analysis:

 Mortgagee has the right to file a suit to recover mortgaged money in the following
circumstance:

1. Personal Agreement to Pay: mortgagor binds himself personally to pay.

2. Where security is destroyed:: properly wholly or partially destroyed but not with the
fault of the mortgagor or mortgagee-
mortgagee accident( flood, fire)or value of the property is
reduced to ½ or less than 1/3 and mortgagee has given the mortgagor a reasonable
opportunity of providing further
urther security and the mortgagor has failed then –
mortgagee need not weight- can immediately file a suit to recover the mortgaged
money.
3. Mortgagee deprived of security due to wrongful act or default of Mortgagor:
Mortgagor can
immediately file a suit to recover.

4. Mortgagor failure to deliver possession: can immediately file a suit to recover.

 Court can stay the mortgage suit until all other remedies are not exhausted.
Sec. 69. Power of sale when valid.—A A mortgagee, or any person acting on his behalf, shall,
subject to the provisions of this section, have the power to sell or, concur in selling the
mortgaged property, or any part thereof, in default of payment of the mortgage-money,
mortgage withou
the intervention of the Court,, in the following cases and in no others, namely:
(a) where the mortgage is an English mortgage,
mortgage and neither the mortgagor nor the mortgagee
a Hindu, Muhammad, or Buddhist or a member of any other race, sect, tribe, or class from
time to time specified on this behalf by the State Government,
Government in the Official Gazette;

(b) where a power of sale without the intervention of the Court is expressly conferred on the
mortgagee by the mortgage deed,, and the mortgagee is the Government;
(c) where a power of sale without the intervention of the Court is expressly conferred on the
mortgagee by the mortgage-deed,
deed, and the mortgaged property or any part thereof was, on
the date of the execution of the mortgage-deed,
mortgage 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
(2)No such power shall be exercised unless and until—
until

(a) notice in writing requiring payment of the principal money has been served on the
mortgagor,, or, one of several mortgagors, and default has been made in payment of the princip
money, or of part thereof, for three months after such service; or

(b) some interest under the mortgage amounting at least to five hundred rupees is in arrear and
unpaid for three months after becoming due..

(3)) When a sale has been made in the professed exercise of such a power, the title of the
purchaser shall not be impeachable on the ground that no case had arisen to authorize the sale
that due notice was not given,, or that the power was otherwise improperly or irregularly
'exercised, but any person damnified by an unauthorised,
unauthorised or improper, or irregular' exercise of
the power shall have his remedy in damages against the person exercising the power.
(4) The money which is received by the mortgagee,
mortgagee arising from the sale, after discharge
of prior incumbrances, if any, to which the sale is not made subject, or after payment into
Court under section 57 of a sum to meet any prior incumbrance, shall, in the absence of a
contract to the contrary, be held by him in trust to be applied by him, first, in payment of
all costs,, charges, and expenses properly incurred by him as incident to the sale or any
attempted sale; and, secondly, discharge of the mortgage-money
mortgage and costs and other
money, if any, due under the mortgage; and the residue of the money so received shall be
paid to the person entitled to the mortgaged property,
property or authorised to give receipts for th
proceeds of the sale thereof.

(5)) Nothing in this section or in section 69A applies to powers conferred before the first
day of July 1882.
Analysis:

 Sec. 67 + 68 provides the Power of Sale of mortgaged property with the intervention of t
Court.
Section
ection 69 provides the Power of Sale of mortgaged property without the intervention of t
Court-

1. default in payment of the mortgage money is made.

2. Mortgage is an English mortgage and parties are not Hindu, Muslim, or Buddhist or do n
belong to any race or class specified according to the state Government.
3. When the mortgagee is government and power to sell is expressly given to the mortgagee
4. When mortgaged property is situated within the towns of Calcutta, Madras, Bombay or in
any other town or area which the State Government and power to sell is expressly given in
mortgaged deed.
But the sale can be made under the following conditions only:

1. In default of principal amount, after giving 3 months’ notice to the mortgagor.

2. When the interest is not paid, the sale can be exercised only, if the amount is at least Rs.

500/- and it remains unpaid for at least 3 months.

3. Sale can be done through public auction or he can sell privately.

4. Once the sale is complete mortgagor will lose his right of redemption.

 Narandas Karsondas v. S.A. Kamplam 1977. SC- merely putting property in an auction
does not destroy mortgagors’ right of redemption, for it auction must be complete.
Appropriation of Sale Proceeds:: Amount can be divided as-
as

1. Needs to discharge prior encumbrances if any

2. Costs and expenditures in making the sale must be discharged.

3. Mortgaged money will be discharged.

4. The rest amount goes to the mortgagor.

 The title of the purchaser will not be affected – if there is any irregularity in the sale
procedure- and the purchaser is innocent and not having notice of irregularities.
Sec. 69A. Appointment of receiver.—(1)) A mortgagee having the right to exercise a power
of sale under section 69 shall, subject to the provisions of sub-section
sub (2),be entitled to
appoint, by writing signed by him or on his behalf, a receiver of the income of the mortgaged
property or any part thereof.
(2) Any person who has been named in the mortgage-deed
mortgage and is willing and able to act as
receiver may be appointed by the mortgagee.
mortgagee If no person has been so named, or if all
persons named are unable or unwilling to act, or are dead, the mortgagee may appoint any
person to whose appointment the mortgagor agrees;
agrees failing such agreement, the mortgagee
shall be entitled to apply to the Court for the appointment of a receiver, and any person
appointed by the Court shall be deemed to have been duly appointed by the mortgagee.
A receiver may at any time be removed by writing signed by or on behalf of the mortgage
and the mortgagor, or by the Court on application made by either party and on due cause
shown.
A vacancy in the office of receiver may be filled in accordance with the provisions of this
sub-section.
(3)) A receiver appointed under the powers conferred by this section shall be deemed to be
the agent of the mortgagor;; and the mortgagor shall be solely responsible for the receiver's
acts or defaults, unless the mortgage-deed
deed otherwise provides or unless such acts or defau
are due to the improper intervention of the mortgagee.
mortgagee

(4) The receiver shall have power to demand and recover all the income of which he is
appointed receiver, by suit, execution or otherwise,
otherwise in the name either of the mortgagor or
of the mortgagee to the full extent of the interest which the mortgagor could dispose of, an
to give valid receipts accordingly for the same, and to exercise any powers which may hav
been delegated to him by the mortgagee in accordance with the provisions of this section
 (5) A person paying money to the receiver shall not be concerned to inquire if the
appointment of the receiver was valid or not.

 (6)) The receiver shall be entitled to retain out of any money received by him, for his
remuneration, and in satisfaction of all costs, charges and expenses incurred by him as
receiver, a commission at such rate not exceeding five per cent. on the gross amount o
all money received as is specified in his appointment,
appointment and, if no rate is so specified, th
at the rate of five per cent.. on that gross amount, or at such other rate as the Court thin
fit to allow, on application made by him for that purpose.
purpose

 (7) The receiver shall, if so directed in writing by the mortgagee,

mortgagee insure to the extent, i
any, to which the mortgagee might have insured, and keep insured against loss or
damage by fire, out of the money received by him, the mortgaged property or any part
thereof being of an insurable nature.
(8)) Subject to the provisions of this act as to the application of insurance money, the
receiver shall apply all money received by him as follows, namely:—
(i) in discharge of all rents,, taxes, land revenue, rates and outgoings whatever affecting th
mortgaged property;
(ii) in keeping down all annual sums or other payments, and the interest on all
principal sums, having priority to the mortgage in right whereof he is receiver;
(iii)) in payment of his commission, and of the premiums on fire, life or other
insurances, if any, properly payable under the mortgage-deed
mortgage or under this Act, and the
cost of executing necessary or proper repairs directed in writing by the mortgagee;
(iv) in payment of the interest falling due under the mortgage;
(v)) in or towards discharge of the principal money, if so directed in writing by the
mortgagee; and shall pay the residue, if any, of the money received by him to the person
who, but for the possession of the receiver, would have been entitled to receive the incom
of which he is appointed receiver, or who is otherwise entitled to the mortgaged property

(9) The provisions of sub-section (1)) apply only if and as far as a contrary intention is no
expressed in the mortgage-deed;
deed; and the provisions of sub-sections
sub (3) to (8) inclusive m
be varied or extended by the mortgage--deed, and, as so varied or extended, shall, as far a
may be, operate in like manner and with all the like incidents, effects and consequences,
if such variations or extensions were contained in the said sub-sections.
sub
(10)) Application may be made, without the institution of a suit, to the Court for its
opinion, advice or direction on any present question respecting the management or
administration of the mortgaged property, other than questions of difficulty or importanc
not proper in the opinion of the Court for summary disposal. A copy of such application
shall be served upon, and the hearing thereof may be attended by, such of the persons
interested in the application as the Court may think fit. The costs of every application
under this sub-section
section shall be in the discretion of the Court.
(11)In
)In this section, “the Court” means the Court which would have jurisdiction in a suit t
enforce the mortgage.
Analysis:
1. The receiver will be appointed to look after the sale by the mortgagee.
2. The receivers are considered the agent of the mortgagor.
mortgagor
3. The section talks about the appointment of the receiver in all the cases where the
mortgagee has the power to sell the property without the intervention of the Court.
4. Added by the 1929 Amendment Act.
5. Mortgager can be appointed
i. by Mortgagor-
ii. by Mortgagee –when-
• The persons nominated by the mortgagor dead
• The persons nominated by the mortgagor have refused to be the receiver.
iii. Court : on application
Position of the Receiver :
1. Receiver appointed under this section acts as a agent of the mortgagor.
2. His duty is to look after the income of the mortgaged property.
3. The receiver has the duty to apply the mortgage money in the following direction :-
:
i. In discharge of all the rents, taxes, land revenue and other outgoings affecting the
mortgaged property.
ii. Discharge of the prior mortgage
iii. Mortgage amount
iv. Receivers Remuneration
Sec. 70. Accession to the mortgaged property.—If,
property 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,
security be entitled to such accession.

 This section 63 entitled a mortgagor to redeem the property together with accessions if
any.

 section 70 says that the mortgagee is entitled to the accession only for the purpose of
security.

 Ilus: A mortgages to B a certain field bordering on a river. The field is increased by

alluvion. For the purposes of his security, B(mortgagor)
B( is entitled to the increase.
Sec. 71. Renewal of mortgaged lease.—
—When the mortgaged property is as 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,
security be entitled to the new lease.

 Analysis: If the mortgaged property is in lease and the mortgagor obtains a renewal of
the lease the mortgagee in the absence of a contract to the contrary shall for the purpos
of security be entitled to the new lease.
Sec. 72. Rights of mortgagee in possession.—A
possession mortgagee may spend such money as is
necessary—
(b) for the preservation off the mortgaged property from destruction, forfeiture or sale;
(c) for supporting the mortgagor's title to the property;
(d) for making his own title thereto good against the mortgagor;
mortgagor and
(e) when the mortgaged property is a renewable lease-hold,
lease for the renewal of the lease;
and may, in the absence of a contract to the contrary, add such money to the principal
money, at the rate of interest payable on the principal,
principal and, where no such rate is fixed, at
the rate of nine percent per annum
 Provided that the expenditure of money by the mortgagee under clause (b)
( or clause
(c)shall
)shall not be deemed to be necessary unless the mortgagor has been called upon and ha
failed to take proper and timely steps to preserve the property or to support the title.

 Where the property is by its nature insurable, the mortgagee may also, in the absence of a
contract to the contrary,, insure and keep insured against loss or damage by fire the whole
or any part of such property; and the premiums paid for any such insurance shall be adde
to the principal money with interest at the same rate as is payable on the principal money
or, where no such rate is fixed, at the rate of nine percent. per annum. But the amount of
such insurance shall not exceed the amount specified on this behalf in the mortgage deed
(if no such amount is therein specified) two-thirds (2/3) of the amount that would be
required in case of total destruction to reinstate the property insured.
 Nothing in this section shall be deemed to authorise the mortgagee to insure when an
insurance of the property is kept up by or on behalf of the mortgagor to the amount in
which the mortgagee is hereby authorised to insure.
Analysis:

 Only in necessary cases mortgagee has the right to spend on the mortgaged property a
according to Sec. 72.

 In all other cases necessity is a matter of fact that needed to e decided in each case.

Circumstances when expenditure is allowed:

1. To Preserve mortgaged property from destruction:

destruction it is the duty of the mortgagor – if h
fails- the mortgagee can take steps and expenditure can be included in mortgage mone

2. Expenditure to defend the title:: from forfeiture or sale- expenditure can be included in
mortgage money.
3. Defence of the mortgagee’s title against the mortgagor:
mortgagor if the mortgagor denies the loan o
the ground of legal defect,, the mortgagee can file a suit to protect his status as mortgagee, an
expenditure can be included in mortgage money

4. Renewal of lease:: if the mortgaged property is already on the lease, the cost spent on
renewal of the lease may be included in mortgage money and can be recovered at the time o
redemption.

5. Premium of Insurance:: if the property is not Insured-

Insured can be insured by the mortgagee- Th
premium of Insurance is added to mortgage money with interest decided- if not decided- no
more than 9 %.
Sec. 73. Right to proceeds of revenue sale or compensation on acquisition.—
acquisition

(1)Where
)Where the mortgaged property or any part thereof 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 mortgage
shall be entitled to claim payment of the mortgage money, in whole or in part, out of any
surplus of the sale proceeds remaining after payment of the arrears and of all charges and
deductions directed by law.
(2)) Where the mortgaged property or any part thereof or any interest therein is acquired
under the Land Acquisition Act, 1894 (1 of 1894), or any other enactment for the time
being in force providing for the compulsory acquisition of immovable property, the
mortgagee shall be entitled to claim payment of the mortgage money, in whole or in part,
out of the amount due to the mortgagor as compensation.
compensation

(3) Such claims shall prevail against all other claims except those of prior encumbrances
and may be enforced notwithstanding that the principal money on the mortgage has not
become due.
1. If the mortgaged property is sold for the nonpayment of the government dues, then the
mortgagee is entitled to claim his mortgage money from sale proceeds.

 Ameer Auhammed v. S.A.S. Allagappa Chettier, 1977. If the mortgaged property is sold
then the mortgagee is entitled to claim his mortgage money from the sale amount.

2. If the mortgaged property is compulsorily acquired under the Land Acquisition Act 1894
the mortgagee can claim the mortgaged money from the compensation due to the mortgago

3. Mortgagee claim of mortgage money shall prevail on all other claims except – on prior
due. Mortgagee can get the amount even if the due date is not there.
Sec. 76. Liabilities of mortgagee in possession-
possession When, during the continuance of the
mortgage, the mortgagee takes possession of the mortgaged property,—
property,
(a) he must manage the property as a person of ordinary prudence would manage it if it were
his own;
(b) he must use his best endeavors to collect the rents and profits thereof;
(c) he must, in the absence of a contract to the contrary, out of the income of the property,
pay the Government-revenue,, all other charges of a public nature and all rent accruing due in
respect thereof during such possession, and any arrears of rent in default of payment of whic
the property may be summarily sold;
(d) he must, in the absence of a contract to the contrary,
contrary make such necessary repairs of the
property as he can pay for out of the rents and profits thereof after deducting from such rents
and profits the payments mentioned in clause (c)and
( the interest on the principal money;
(e) he must not commit any act which is destructive or permanently injurious to the propert
(f) where he has ensured the whole or any part of the property against loss or damage by fir
he must, in case of such loss or damage, apply any money which he actually receives unde
the policy, or so much thereof as may be necessary,
necessary in reinstating the property, or, if the
mortgagor so directs, in reduction or discharge of the mortgage-money;
mortgage
(g) he must keep clear, full, and accurate accounts of all sums received and spent by him as
mortgagee, and, at any time during the continuance of the mortgage, give the mortgagor, at
his request and cost, true copies of such accounts and of the vouchers by which they are
supported;
(h)) his receipts from the mortgaged property, or, where such property is personally occupied
by him. a fair occupation-rent in respect thereof shall, after deducting the expenses properly
incurred for the management of the property and the collection of rents and profits and the
other expenses mentioned in clauses (c) and (d), and interest thereon, be debited against him
reduction of the amount (if any) from time to time due to him on account of interest and, so fa
as such receipts exceed any interest due, in reduction or discharge of the mortgag -money; the
surplus, if any, shall be paid to the mortgagor;

(i)) when the mortgagor tenders, or deposits in manner hereinafter provided, the amount for th
time being due on the mortgage, the mortgagee must, notwithstanding the provisions in the
other clauses of this section, account for his receipts from the mortgaged property from the da
of the tender or from the earliest time when he could take such amount out of Court, as the ca
may be and shall not be entitled to deduct any amount therefrom on account of any expenses
incurred after such date or time in connection with the mortgaged property.
 Loss occasioned by his default.—IfIf the mortgagee fails to perform any of the duties
imposed upon him by this section, he may, when accounts are taken in pursuance of a
decree made under this Chapter, be debited with the loss,
loss if any, occasioned by such
failure.

Liabilities of the mortgagee in possession of the property are :

1. Liability to manage the property with ordinary prudence.
2. Liability to collect rents and profits with due diligence.
3. Liability to pay the government dues in case there is no contract to the contrary.
4. Liability to spend money for necessary repairs in the mortgaged property.
5. Liability not to commit waste on the mortgaged property.
6. When the amount is paid by the mortgagor on account of the expenditure made by the
mortgagee, the mortgagee can not deduct any amount from the profit of the property.
7. For any loss by failure of the mortgagee, he will be liable to pay
 Priority of Securities
Sec. 78 Postponement of the prior mortgagee—Where,
mortgagee through the fraud, misrepresentatio
or gross neglect of a prior mortgagee,, another person has been induced to advance money on
the security of the mortgaged property, the prior mortgagee shall be postponed to the
subsequent mortgagee.

 Section applies in 3 conditions fraud, misrepresentation, or gross negligence of mortgagee

the priority is mortgaged to next person then subsequent mortgagee will have first right to
redeem.

 Sec. is an exception to the doctrine of priority.

priority
Sec. 79. Mortgage to secure uncertain amount when the maximum is expressed.—If
expressed a
mortgage is made to secure future advances,, the performance of an engagement or the balance
of a running account, expresses the maximum to be secured thereby, a subsequent mortgage o
the same property shall, if made with a notice of the prior mortgage,
mortgage be postponed to the prior
mortgage in respect of all advances or debits not exceeding the maximum, though made or
allowed with notice of the subsequent mortgage.
Illustration: A mortgages Sultanpur to his bankers, B & Co., to secure the balance of his
account with them to the extent of Rs. 10,000.
10,000 A then mortgages Sultanpur to C, to secure
Rs. 10,000; C having notice of the mortgage to B & Co., and C gives notice to B & Co. of
the second mortgage. At the date of the second mortgage, the balance due to B & Co. does
not exceed Rs. 5,000.. B & Co. subsequently advance to A sums making the balance of the
account against him exceed the sum of Rs. 10,000. B & Co. are entitled to the extent of Rs
10,000, to priority over C.
1. The subsequent mortgagee is taking notice of the prior mortgage.

2. The maximum amount – that can be secured under the first mortgage – must be
mentioned in the first mortgage.

3. If no maximum amount is fixed – Sec. will not apply.

 Marshalling and Contribution

Sec. 81. Marshalling securities.—If the owner of two or more properties mortgages them t
one person and then mortgages one or more of the properties to another person, the
subsequent mortgagee is, in the absence of a contract to the contrary, entitled to have the pr
mortgage debt satisfied out of the property or properties not mortgaged to him, so far as the
same will extend, but not so as to prejudice the rights of the prior mortgagee or of any other
person who has for consideration acquired an interest in any of the properties.

Analysis:

1. Marshalling means arranging things.

2. The subsequent mortgagee can request the prior mortgagee to recover the amount from th
property not mortgaged to him.

Ilu: A mortgaged X, Y, and Z to B for securing a loan of Rs 10,000, then He (A) again
mortgages Z property to C for 5 000 Rs.

B – prior mortgagee
C - Subsequent mortgagee

C- can request first to satisfy 10.000 Rs. Loan by sale of X & Y property and not Z that is
mortgaged to him.

 The mortgagees may be two or more people but the mortgagor is the same person.
 Sec. gives the right to the Subsequent mortgagee to protect his interest without affecting
the interest of the Prior mortgagee.

 Ramaswamy v. Madura Mills, 1916.- Marshalling can be done if the mortgagor is the
same person and the properties are also the same.
same

 Right of marshalling is subject to Contract to Contrary.

Contrary
Sec. 82. Contribution to mortgage-debt.—
—Where property subject to a mortgage belongs t
two or more persons having distinct and separate rights of ownership therein, the different
shares in or parts of such property owned by such persons are, in the absence of a contract to
the contrary, liable to contribute rateably to the debt secured by the mortgage, and, for the
purpose of determining the rate at which each such share or part shall contribute, the value
thereof shall be deemed to be its value at the date of the mortgage after deduction of the
amount of any other mortgage or charge to which it may have been subject on that date.
Where, of two properties belonging to the same owner, one is mortgaged to secure one de
and then both are mortgaged to secure another debt,
debt and the former debt is paid out of the
former property, each property is, in the absence of a contract to the contrary, liable to
contribute rateably to the latter debt after deducting the amount of the former debt from th
value of the property out of which it has been paid.

Nothing in this section applies to a property liable under section 81 to the claim of the
subsequent mortgagee.
 Analysis
Analysis:

 Contribution means providing money for a common fund. This section deals with the rules
relating to the contribution of money towards mortgaged debt.

 If the mortgaged property belongs to two or more persons having different shares, then each of
such shares is liable to contribute to the debt according to his respective shares. This section
contemplates a situation in which there are two or more debtors (mortgagors) who take a commo
loan by mortgaging different properties or different shares in one property.

 Co- mortgagors are not personally liable,, they are liable only to the extent of their respective
shares in the property.

 A, B & C- jointly mortgage to – D for Rs. 10,000. In Mortgaged property A has ½ share, and B
C has ¼ each. To recover the money(by the mortgagee) they are liable to the extent of their
shares.
Sec. 100. Charges.—Where
Where immovable property of one person is by an act of parties or
operation of law made security for the payment of money
mon to another, and the transaction do
not amount to a mortgage, the latter person is said to have a charge on the property; and all
the provisions hereinbefore contained which apply to a simple mortgage shall, so far as ma
be, apply to such charge

 Nothing in this section applies to the charge of a trustee on the trust property for expens
properly incurred in the execution of his trust,
trust and, save as otherwise expressly provided
by any law for the time being in force,

 No charge shall be enforced against any property in the hands of a person to whom such
property has been transferred for consideration and without notice of the charge.
Analysis:

 When the immovable property of a person is security for the payment to another and th
transaction is not a mortgage that is called a charge.

 In it no interest (Property) is transferred and the charge holder is simply entitled to

recover his money from that property.

 Interest
nterest in the property charged is created in favor of the charge holder.

 Dalumbi Devi v. Raghu Raj, 2002, HP-

HP the owner of the property executed power of
attorney in favor of ‘P’ for management of her property and provides that if power of
attorney will be revoked ‘P’ could claim expenses that to manage the property.

Held- reimbursement of expenses does not amount creation of interest in the property, so a
charge is not created.
 Registration is Compulsory.

 Saumya Mini Ltd. V. Sri Equipment Finance Ltd. 2016, Cal.-

Cal Charge is not a transfer o
property.

Kinds of Charge

1. Charge created by the Act of the Parties :

• No particular mode,

• Clear intention to make the property as security for payment of money.

• If the value of the property is Rs. 100 or more registration is a must.

2. Charges by the Operation of Law :

• The charge created by decree of the court.

• Registration is Optional.
Sec. 101 No merger in case of subsequent encumbrance—Any
encumbrance mortgagee of, or person
having a charge upon, immovable property, or any transferee from such Mortgagee or
charge-holder,
holder, may purchase or otherwise acquire the rights in the property of the mortgag
or owner, as the case may be, without thereby causing the mortgage or charge to be merge
as between himself and any subsequent mortgagee of, or person having a subsequent charg
upon, the same property; and no such subsequent mortgagee or charge-holder shall be
entitled to for close or sell such property without redeeming the prior mortgage or charge,
otherwise than subject thereto.
Analysis:

 subsequent mortgagee or charge-holder

holder shall not be entitled to close or sell any proper
without redeeming the prior mortgage or charge, or otherwise.

 There is no merger if an interest in the mortgaged property is outstanding and the

mortgage which has to redeem can be taken as a defence against any subsequent
mortgage.

 E.g. Mortgagor ‘A’, mortgaged his property ‘X’ to ‘B’ then to ‘C’ and after it to ‘D’.
Now if ‘B’ gets the right to redemption against mortgagor ‘A’, ‘B’ can not extinguish i
by merger. ‘B’ can also use as a shield against ‘C’ and ‘ D’ or both.