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April 3, 2023


  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, Section 58(a)Transfer of Property Act, 1882.  A dead pledge; a thing put into the hands of a creditor. A mortgage is the creation of an interest in property, defeasible (i.e., annullable) upon performing the condition of paying a given sum of money, with interest thereon, at a certain time. This conditional assurance is resorted to when a debt has been incurred or a loan of money or credit effected, in order to secure either the repayment of the one or the liquidation of the other. The debtor or borrower, is then the mortgagor, who has charged or transferred his property in favour of or to the creditor or lender, who thus becomes the mortgagee. If the mortgagor pay the debt or loan and interest within the time mentioned in a clause technically called the proviso for redemption, he will be entitled to have his property again free from the mortgagee’s claim.

Anomalous Mortgage — A mortgage which is not a simple mortgage, a mortgage by conditional sale, an usufructuary mortgage, an English mortgage or a mortgage by deposit of title-deeds within the meaning of this section is called an anomalous mortgage, Section 58(g)Transfer of Property Act, 1882 .

English mortgage — 1. Where the mortgagor binds himself to repay the mortgage-money on a certain date and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he will re-transfer it to the mortgagor upon payment of the mortgage-money as agreed, the transaction is called an English mortgage, Section 58(e)Transfer of Property Act, 1882 . Where the mortgager binds himself to repay the mortgage money on a certain date and transfers the mortgaged property absolutely to the mortgagee, but subject to a proviso that he will transfer it to the mortgager upon payment of the mortgage money as agreed, the transaction is called an English mortgage, Narandas Karsondas v. S.A. Kamtam(1977) 3 SCC 247.

Equitable mortgage — 1. The requisites of an equitable mortgage are: (i) a debt; (ii) a deposit of title deeds; and (iii) an intention that the deeds shall be security for the debt, Syndicate Bank v. APIIC Ltd.(2007) 8 SCC 3612. The following mortgages are equitable — (1) Where the subject of a mortgage is trust property, which security is effected either by a formal deed of a written memorandum, notice being given to the trustees in order to preserve the priority. (2) Where it is an equity of redemption, which is merely a right to bring an action in the Chancery Division to redeem the estate. (3) Where there is a written agreement only to make a mortgage, which creates an equitable lien on the land. (4) Where a debtor deposits the title-deeds of his state with his creditor or some person on his behalf, without even a verbal communication. The deposit itself is deemed evidence of an executed agreement or contract for a mortgage for such estate. This transaction, which appears to be a judicial repeal of the Statute of Frauds, 29 Car. 2, c. 3, Section 4, is estansively resorted to and is known in practice as an equitable mortgage by deposit of title-deeds. An equitable mortgage being a contract for a mortgage, the mortgagee might file a bill or claim in Equity, either for a legal mortgage, a foreclosure and conveyance or a sale.

Mortgage By Conditional Sale — Where, the mortgagor ostensibly sells the mortgaged property on condition that on default of payment of the mortgage-money on a certain date 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, [Section 58(c)Transfer of Property Act, 1882 .

Mortgage By Deposit Of Title-Deeds — Where a person in any of the following towns,namely, the towns of Calcutta, Madras and 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, Section 58(f)Transfer of Property Act, 1882 .

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 failing 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, Section 58(b)Transfer of Property Act, 1882.

Usufructuary Mortgage — Where the mortgagor delivers possession or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee and authorizes 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 lieu of interest or partly in payment of the mortgage-money, the transaction is called an usufructuary mortgage and the mortgagee an usufructuary mortgagee, [Section 58(d)Transfer of Property Act, 1882 .

Mortgage or lease — Mortgages are not always simple, English or usufructuary or such other types as defined in the Transfer of Property Act. They are anomalous too and sometimes more anomalous than what is defined in the said Act. Even so, there is one most essential feature in a mortgage which is absent in a lease, that is, that the property transferred is a security for the repayment of debt in a mortgage whereas in a lease it is a transfer of a right to enjoy the property, Puzhakkal Kuttappu v. C. Bhargavi(1977) 1 SCC 17, 21, 22.

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