Page 2170 - 2177 DOI: https://doij.org/10.10000/IJLMH.

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INTERNATIONAL JOURNAL OF LAW

MANAGEMENT & HUMANITIES
[ISSN 2581-5369]
Volume 4 | Issue 3
2021
© 2021 International Journal of Law Management & Humanities

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2170 International Journal of Law Management & Humanities [Vol. 4 Iss 3; 2170]

Rights and Liabilities of Mortgagor

UJJWAL TRIPATHI1

ABSTRACT
A mortgage is a famous and old concept. It is focused on the principle of equity and good
conscience. Sec. 58 of the Transfer of Property Act (TOPA) 1882 explains a mortgage. A
mortgage is particularly the transfer of an interest in some immovable property by a person
termed called mortgagor to another person called the mortgagee. Transfer of property act
recognizes seven rights and five liabilities of the mortgagor. This research paper attempts
to study the rights and liabilities of the mortgagor under the Transfer of Property Act along
with some important judgments delivered by the Supreme Court on such rights of the
mortgagor. Lastly, the aim of the research is to compare the rights and liabilities of the
mortgagor in the present modern world and to realize the need for an amendment in
mortgage law under the Transfer of Property Act for stricter implementation of laws.
Keywords: Mortgagor, Mortgage, Rights, Property, Mortgagee, Redemption.

I. MORTGAGE
The transfer of an interest in some immovable property is called a mortgage.2 Not all the
interest has to be transferred, but only some of the interest which is enjoyed by mortgagor in
in the property is transferred for the objective of security for repayment of the loan.3

(A) Important terms under mortgage

● Mortgagor: He is the one who transfers the interest in specific immovable property is
called as a mortgagor.

● Mortgagee: To whom that interest in specific immovable property is transferred, is

known as mortgagee.

● Mortgage-money: It is the principal amount that is given as a loan and the interest
amount which the mortgagor will pay to the mortgagee along with the principal amount.

The principal amount + interest = mortgage-money.

1
Author is a student at Christ (Deemed to be University), Delhi NCR, India.
2
Dr. R.K. Sinha, The Transfer Of Property Act, 307, (21 st ed. 2021).
3
Transfer of Property Act, § 58, No. 4, Imperial Legislative Council, 1882, (India).

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● Mortgage-deed: If at all there is an instrument by which transfer of an interest in a

specific immovable property is affected, then it is known as mortgage-deed.

(B) Forms of Mortgage

Transfer of Property Act recognizes six kinds of mortgage.4

1. Simple Mortgage [section-58(b)]

2. Mortgage by conditional sale [section-58(c)]

3. Usufructuary Mortgage [section-58(d)]

4. English Mortgage [section-58(e)]

5. Mortgage by deposit of title deeds [section-58(f)]

6. Anomalous Mortgage [section-58(g)]

II. RIGHTS OF MORTGAGOR

As we have discussed, what does mortgage mean, and who is a mortgagor. To understand it in
simple terms, a mortgage is the transfer of an interest in some immovable property, and the
person who transfers such interest is called a mortgagor, and if there is any instrument by which
such transfer is affected, then it is called mortgage-deed. However, the Transfer of Property
Act does not leave the mortgagor uncovered, that means every mortgage-deed leaves a right to
the mortgagor and a corresponding liability for the mortgagee and vice versa. The rights of
mortgagor are as follows:

1. Right to redemption

2. Obligation to transfer to the third party rather than re-transferring it to the mortgagor

3. Right to inspection and production of documents.

4. Right to redeem separately or simultaneously.

5. Right to accession

6. Right to Renewed Lease

7. Right to grant a lease

(A) Three important provisions under section 60.5

• Right of redemption

4
Transfer of Property Act, § 58, No. 4, Imperial Legislative Council, 1882, (India).
5
Transfer of Property Act, § 60, No. 4, Imperial Legislative Council, 1882, (India).

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• Once mortgage, always a mortgage

• Clog on Redemption

1. Right to redemption

The word redemption means to get back the mortgaged property by paying mortgage Debt. It
is the right to recover something by making certain payments. So, in terms of the mortgage, it
is the right of the mortgagor to recover or get back the property after he made the payment of
the loan.6 The right of redemption pre-supposes the existence of a mortgage which is at the
time of redemption is security for the money that is due on the mortgagee.7 This right can be
exercised by the mortgagor as long as the mortgage is alive.8

(a) Modes of Exercise of Right of Redemption

• Legal validity of mortgage- The mortgage must be legally valid.

• Due to principle- The mortgagor can redeem the mortgage anytime after the mortgage
money is paid, and he cannot be avoided from it except the decree of the court.
• Payment of dues money – The payment of dues money can be made to the mortgagee
directly or to his agent. However, such payment must be done at the proper time and
place without condition.
• By filing a suit for redemption- The mortgager can make the payment to the
mortgagee directly or by depositing the money in court. However, the third option is to
file a suit in court for the redemption. The suit has to be filed by the mortgagor after the
principal money has become due.

The mortgagor has the right to ask the mortgagee to (i) deliver to him the mortgage deed and
other documents relating to the mortgaged property; (ii) deliver possession to the mortgagor if
the mortgagee is in possession; and (iii) re-transfer the mortgaged property in compliance with
the mortgagor's preferences after paying or tendering the mortgage money to the mortgagee.9

The mortgagor's right of redemption co-exists with the mortgagee's right of sale or foreclosure
in default of repayment of loan on the due date.10 It means if the mortgagor has the right to get
back his property on payment of the loan, then the mortgagee has the right as well to take back
his money by foreclosure of the mortgage. A reasonable balance is maintained between these

6
Dr. R.K. Sinha, The Transfer Of Property Act, 316, (21 st ed. 2021).
7
Muhammad Mahmud Ali v. Kalyan Das, ILR 18 All 189, 192.
8
Thota China Subba Rao v Thota China Subha Rao vs Mattapalli Raju, (1949) FCR 484.
9
Prithi Nath Singh v. Suraj Ahir, (1963) 3 SCR 302.
10
Ram Kishun Prasad v Manohar Lal Gupta, AIR 2008 NOC 845.

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two rights.

2. Once a mortgage always a mortgage.

This maxim means that a transaction that at one time is mortgage would always be a mortgage.
A revision or change can be done, but it should not affect the right of redemption. The purpose
of this doctrine is to protect the interest of the mortgagor. When the mortgagor is unable to
repay the money on the due date, then if the mortgagee, by taking advantage of his position,
makes an agreement that the mortgagor cannot exercise his right of redemption after the expiry
of the due date, then it would be void. The doctrine is based on the principle of .equity.

The well-known rule that the agreement of the parties overrides the law does not apply to a
mortgage. That means even if there is an agreement between the mortgagor and mortgagee to
which the mortgagor himself has agreed that the mortgagor cannot exercise his right of
redemption, which equity provided him would not be valid.

The mortgage and right of redemption are coextensive whether the right of redemption is
described or not. The right to seek redemption does not arise on the date of the mortgage.
Instead, it arises when the payment is made by the mortgagor to the mortgagee in the court.11

3. Clog on Redemption

It is a condition or stipulation which prevents the mortgagor from redeeming his right to redeem
the mortgage-property on payment of mortgage-money. Even the mortgagor cannot stipulate
against his own right of redemption. In India, a clog on mortgagor's right of redemption is void
under section 60.12

i. Obligation to transfer to the third party rather than re-transferring it to the

mortgagor.13

This section was not initially in the act. It was added after the amending act of 1929.14 The
object of this section is to enable the mortgagor to pay off the debt of the mortgagee by further
taking a loan from some other person on the same property.15 Thus, the mortgage as such is not
extinguished. It remains alive, and just the mortgage-debt is assigned by the mortgagee to such
another person. The other person has to be nominated by the mortgagor. However, the
mortgagor can do this only when the debt has become payable and the mortgage-money is paid

11
Ram Kishan v Sheo Ram, AIR 2009 P&H 77 (FB).
12
Transfer of Property Act, § 60, No. 4, Imperial Legislative Council, 1882, (India)..
13
Transfer of Property Act, § 60A, No. 4, Imperial Legislative Council, 1882, (India).
14
Transfer Of Property (amendment) Act, 1929, No. 20, 1929 (India).
15
Dr. R.K. Sinha, The Transfer Of Property Act, 339, (21 st ed. 2021).

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by the mortgagor as required under section 6016 of this act.

ii. Right to inspection and production of documents.17

This section was also inserted by the amending act of 1929 18. According to it, in a mortgage,
the mortgagor has to hand over the title-deeds and other documents of the mortgaged property
to the mortgagee. The documents remain in the custody of the mortgagee as long as the
mortgage subsists. The mortgagor has the right to ask the mortgagee to produce those
documents to the mortgagor for inspection within a reasonable time and at his (mortgagor’s)
own cost.

iii. Right to redeem separately or simultaneously.19

A mortgagor who has executed two or more separate mortgage in favour of the same mortgagee
then mortgagor has the right to redeem either any one of them or all of the mortgages together.
The right is subject to any contract to the contrary.

The section gives the mortgagor a right to redeem the mortgages separately or simultaneously.
This right is also applicable where there are two mortgages on the same property, and
mortgagees are different persons.20

iv. Right to accession21

It means during the mortgage when the mortgagee has possession of the mortgaged property
and if during that duration there is an increase/accession in the property, then in the absence of
any contract to the contrary, the mortgagor is entitled to get that accession. Accession means
any kind of addition in the property which increases its value so that the property becomes
more advantageous.

(a) Types of accession

1. Natural accession: These are those accessions that are not made by parties to the mortgage,
and they arise by the course of nature. Natural accessions that occur during the term of the
mortgage may be redeemed by the mortgagor together with the mortgaged property. When the
mortgagor redeems the mortgage, the mortgagee has no right to keep or claim those accessions.

2. Acquired accessions: These types of accessions are those accessories or additions to the

16
Transfer of Property Act, § 60, No. 4, Imperial Legislative Council, 1882, (India).
17
Transfer of Property Act, § 60B, No. 4, Imperial Legislative Council, 1882, (India).
18
Transfer Of Property (amendment) Act, 1929, No. 20, 1929 (India).
19
Transfer of Property Act, § 61, No. 4, Imperial Legislative Council, 1882, (India).
20
Dr. R.K. Sinha, The Transfer Of Property Act, 341, (21 st ed. 2021).
21
Transfer of Property Act, § 63, No. 4, Imperial Legislative Council, 1882, (India).

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property that are made by the mortgagee during the period of a mortgage. It is further classified
into:

(a) Separable acquired accessions: Where the acquired accession is separable from the
property and upon redeem of the mortgage by the mortgagor, the mortgage would
remove those accessions. If the mortgagor desires to take those accessions from the
mortgagee, then he must pay the cost of accessions to the mortgagee.

(b) Inseparable acquired accessions: Where the acquired accession is permanent and
cannot be separated from the mortgaged property, then the mortgagor shall take these
acquisitions together with the mortgaged property. However, the mortgager is liable to
pay the mortgagee the expenses incurred by him in making the acquisition.

v. Right to Renewed Lease22

When a mortgaged property is a lease hold property, and during the duration of the mortgage,
the mortgagee obtains the lease renewal, then upon the redemption, the mortgager is entitled
to get the benefits of the new lease. This is subjected to any contract contrary.

vi. Right to grant a lease23

This section was added by the amending act of 1929. Before this amendment, there was an
uncertainty regarding the mortgagor's right to transfer the mortgaged property by way of lease.
However, now, a mortgagor has the right to lease out the mortgaged property in his possession,
and it is subjected to certain conditions. Those conditions are:

● To avoid any fraudulent transactions, all leases are made in the ordinary course of
management of property, and conditions should be in accordance with local laws
and customs.

● No rent shall be paid in advance, and no premium shall be paid in advance or

promised by the lessee.

● There must be no provision in the contract for the lease to be renewed.

● Any such lease must take effect within six months of the date of execution.

● The last condition is that when the mortgaged property is a building, the lease
should not exceed more than three years.

When the lease is made without fulfilling any of the conditions, the mortgagee is not bound by

22
Transfer of Property Act, § 64, No. 4, Imperial Legislative Council, 1882, (India).
23
Transfer of Property Act, § 65A, No. 4, Imperial Legislative Council, 1882, (India).

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that lease. Parties may also consent to limit the mortgagor's ability to execute any lease under
the mortgage-deed.24

III. LIABILITIES/DUTY OF MORTGAGOR

1. Duty to avoid waste25

This section imposes liability on the mortgager not to do anything which is destructive or
injurious to the mortgaged property and leads to the waste of the property.

Waste is of two types:

● Permissive waste– When the mortgagor having the possession of the mortgaged
property is not held liable to the mortgagee for any minor waste, then it is called
Permissive waste.

● Active waste– A mortgagor is liable to the mortgagee if he or she commits an act

that results in a substantial waste of property or a reduction in the value of the
mortgaged property.

2. Duty to indemnify for defective title26

A situation when a third party starts claiming or interferes with mortgaged property is referred
to as a defective title. It is the liability for the mortgagor to compensate the mortgagee for the
expenses incurred by him for protecting his title of that property.

3. Duty to pay public charges27

After execution of the mortgage, it is the duty of the mortgagor to continue paying revenue,
taxes, or other pubic charges as before. This liability of the mortgagor continues even if he
transfers his equity of redemption. However, when the equity of redemption is extinguished,
the duty of the mortgagor to pay such public charges also ends.28

4. Duty to pay rents29

If in case, the mortgaged property is a lease hold property, then the mortgagor has to pay its
rents. There is an implied covenant that the mortgagor has already paid the rents of that
property, and no rents are due on the date of execution of the mortgage.

24
Sree Lakshmi Products v. SBI, AIR 2007 Mad. 148
25
Transfer of Property Act 1882, § 66, No. 4, Imperial Legislative Council, 1882, (India).
26
Transfer of Property Act, § 65 (b), No. 4, Imperial Legislative Council, 1882, (India).
27
Transfer of Property Act, § 65 (c), No. 4, Imperial Legislative Council, 1882, (India).
28
Dr. R.K. Sinha, The Transfer Of Property Act, 353, (21 st ed. 2021).
29
Transfer of Property Act, § 65 (d), No. 4, Imperial Legislative Council, 1882, (India).

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5. Duty to the discharge of prior mortgage30

An implied liability is imposed on the mortgagor that he has discharged the prior mortgage if
any.

IV. CONCLUSION/COMMENTS
Section 58 of the property act define a mortgage and other important terms. When a mortgage-
deed is executed by the mortgagor in favour of the mortgagee then this act cover rights and
liabilities of the mortgagor. A mortgagor has 7 rights and 5 liabilities against the mortgagee.

Need of amendment in mortgage laws: The Transfer of Property Act was enacted in 1882
since then it has undergone only one amendment i.e. Transfer Of Property (amendment) Act,
1929. Many rights which were not included in the original act were added through this
amendment.e.g. section 63-A, 65-A etc. However, the social and financial conditions of people
in 1882 and 1929 were much different than now in modern world of technology. The world
has changed and so does the law need to be. Law should not be static. It should be amended
with changing times. It is nearly going to be a century since the last amendment was made in
Transfer of Property Act. The mortgager and mortgagee now have found new ways of
deceiving each other in mortgage. Stricter laws need to be made for effective execution of
mortgage. Hence, the amendment is the need of the hour.

*****

30
Transfer of Property Act, § 65 (e), No. 4, Imperial Legislative Council, 1882, (India).

© 2021. International Journal of Law Management & Humanities [ISSN 2581-5369]