Introduction
A Mortgage could be aquite security given by borrower who is that the debtor (mortgagor) for repayment of loan to the lender who is that the creditor (mortgagee). the article of a mortgage is to secure the debt or other obligation. it’s a transfer of limited interest in property.
A Mortgage is transfer of an interest in immovable property.
Section 58 of transfer of Property Act and section 2(17) of Indian legislative act, define Mortgage.
A Mortgage is defined as:
Mortgage Deed includes every instrument whereby for the aim of securing money advanced or to be advanced, by way of loan or an existing or future debt, or the performance of an engagement, one person transfers or create to or in favour of another, a right over or in respect over or in respect of specified property.
Mortgage could be a transfer, but not the transfer of ownership rights and also the main purpose of mortgage could be a transfer of an interest to secure the payment of cash advanced as loan
According to section 58 (a) of transfer of Property Act, A mortgage is transfer of interest in specific immovable property for purpose of securing:
• The payment of cash advanced by way of loan.
• An existing or future debt, or
• The performance of an engagement which can create to a pecuniary liability.
The transferor is named a Mortgagor and also the transferee a Mortgagee.
The principle money and interest of which payment is secured for present are called the
Mortgage- money and also the instrument by which the transfer is effected is named deed.
Elements Of A Mortgage:
The chief elements of a motgage are:
• Two parties are there.
• Transfer of an interest.
• Interest made in specific immovable property.
• Transfer must be to secure the payment of a loan or to secure the performance of a contract.
Two Parties Are There:
The one who actually mortgage the property may be a mortgagor, but a mortgagor includes someone deriving title under the first mortgagor, eg : Heirs, executors who drive their title from the mortgagor.
Transfer Of An Interest:
Must be transfer of an interest in immovable property. it’s not transfer of ownership like in sale but only interest with a hope that in future the property are going to be taken if repay the loan.
A mortgage is transfer of an interest and make a right in rem, but mere agreement to mortgage at a future time isn’t a mortgage.
Specific Immovable Property:
In order to form a Mortgage, it’s essential to specify the immovable property. Otherwise it might be void for vagueness. it’s a security against the loan and also the property exist and there’s little question in property.
Consideration Of Mortgage:
A mortgage must be supported by consideration, which can be either money advanced by way of loan, or an existing or future debt, or the performance of an engagement giving rise to pecuniary liability.
The object of mortgage being t secure debt, a transfer which is created by way of Discharging Debt, isn’t a mortgage. Like in leading of neha sha v Murlidhar(1903).
A Mortgage isn’t always executed for securing debt which has already arisen. A Mortgage are often executed for securing payment of cash to be advanced in future. Execution of mortgage by itself doesn’t make to a debt.
Example : A took a loan from B and B demanded papers of his property as security so A transfer the interest.
The property to be mortgaged must be a particular one, i.e., it are often identified by its size, location, boundaries, etc.
The actual possession of the mortgaged property needn’t always be transferred to the mortgagee.
The interest within the mortgaged property is re-conveyed to the mortgage on repayment of the loan with interest due on.
In case the mortgager fails to repay the loan, the mortgagee gets the proper to recover the debt out of the sale proceeds of the mortgaged property.
Money Deed:
Section 55 (2) of the Act, talks about some relevant covenants or agreements which the parties are required to enter into for the conveyance of immovable property like lease, sale, Mortgage, gifts etc. The deed of conveyance is an instrument or a papers containing terms and conditions regarding the Mortgage. The deed provides the lender with the interest and legal rights over the property. All the rights and interests over the property that the borrower has pledged as collateral are legalized within the title. just in case of any default or failure to pay the loan amount, the lender can claim his legal rights over the property.
Kinds Of Mortgage:
The nature of right transferred in mortgage depends upon the shape or quite the Mortgage.
Section 58 of TPA there are six types of mortgage.
• Simple Mortgage [sec. 58(b
• Mortgage by conditional sale[ sec. 58(c)]
• Usufructuary Mortgage [sec. 58(d)]
• English Mortgage [sec. 58(e)]
• Equitable Mortgage [sec. 58(f)]
• Anomalous Mortgage [sec.58(g)]
Sub- Mortgage:
A mortgage debt being an immovable property, thr mortgagee can assign his interest within the mortgaged property. A mortgage by mortgagee of his interest under the first mortgage is named a sub-mortgage. A sub mortgage is entitled to a decree purchasable of a mortgage rights of his mortgagor
The different kind of mortgage are described as
• Simple Mortgage:
In a simple mortgage, the mortgagor retains the possession of the property with himself, covenants personally to pay the mortgage money, and agrees that in default of payment the mortgagee shall have the proper of realising the debt by causing the property to be sold under an order of court. during this only interest in transferred.
Hence the subsequent 3 conditions are necessary for single mortgage:
• The mortgagor retains the possession of mortgaged property;
• The mortgagor must personally undertake to pay the mortgage money
• The parties must expressly or impliedly agree that within the event of mortgagor failing to pay in keeping with his contract, the mortgagee shall have a right to cause the mortgage property to be sold.
• Possession Not Transferred:
In simple mortgage there’s transfer of the property of mortgagor to mortgagee.
A simple mortgage with possession may be a simple usufructuary which might constitute class of anomalous mortgage.
Since the mortgagee isn’t put into possession of property, he has no right to satisfy the debt out of the rent and profits, nor can he acquire absolutely the ownership of mortgaged property by foreclosure.
The mortgagee may, therefore sue a mortgagor for the mortgage-money or may proceed against the property or both.
Mortgage By Conditional Sale
In Mortgage ostensibly sells the mortgaged property, on condition that:
• On default of payment og mortgage- money on a specific date, the sale is to become absolute
• On such payment being made, the sale is to become void, or the client is to transfer the property to the vendor.
This is, therefore a mortgage within which the ostensible sale is conditional and intended simply as a security for the debt.
The word ostensible mean sit’s an appearance of sale but is absolutely not a buying deal.
The ostensible sale needs not be accompanied with possession.
For Example: X by a deed, conveys his landed property in outright sale but the second a part of the document contains reference for getting suit land redeemed.
The document are treated as mortgage by conditional sale.
In Ismail Kharti v/s Muljibhai Brahmabhatt, the primary a part of the document spoke of an outright sale, whereas the second part contained provision for redemption of the land.
A mortgage by conditional sale
Should be distinguished from a procurement with condition for repurchase. In former, the sale is barely ostensible, whereas within the latter it’s real sale. in a very mortgage, the debt subsists and therefore the right to redeem remains with debtor. But, a procurement with a condition of repurchase isn’t lending and borrowing arrangements, there’s no right t redeem but simply a private right of repurchase is reserved for the vendor.
• Usufructuary Mortgage
In usufructuary mortgage, the property is given as a security to the mortgagee, who is let into possession and permitted to repay himself out of rent and profits of such property.
The possession is given to the mortgagee or the mortgagor must expressly or impliedly binf himself to deliver possession. The mortgagor won’t be personally liable unless there’s a definite agreement to the contrary.
The essential conditions of usufructuary mortgage are:
• Delivery of possession or an express or implied undertaking on the a part of mortgagor to deliver it
• The enjoyment of usufruct by the mortgagee until all his dues under the mortgagee are paid off;
• The mortgagor doesn’t incur any personal liability to repay the money;
• There being no personal liability to pay there’s no forfeiture and remedies by way of foreclosure or sale not hospitable the mortgagee.
Under section 58 (d) no time is fixed for repayment, since the mortgagee is entitled to stay in possession, until the payment of mortgage money, and none can say with any precision when such payment are completely made. If parties stipulate that mortgage is for an exact period it’s not a usufructuary mortgage but become an anomalous one.
There can not be two different usufructuary mortgages on the identical property at same time, because the possession can only incline to at least one only.
In usufructuary mortgage, the mortgagee has the advantage to repay himself. But in mortgage by conditional sale no delivery of possession is given.
English Mortgage:
An English mortgage may be a transaction within which the mortgagor binds himself to repay the mortgage money on a specific date, and transfer the mortgaged property absolutely to the mortgagor, but subject to the proviso that he will retransfer it to the mortgagor upon the payement of the debt.
The three essentials of this manner of mortgage are:
• That the mortgagor should bind himself to repay the mortgage money on certain day;
• That the property mortgaged should be absolutely transferred to the mortgagoee;
• That such absolute transfer should be made subject to the proviso that the mortgagee will reconvey the property to the mortgagor on payment by him of the mortgage money on the day on which the mortgagor bound himself to repay the identical.
An English mortgage resembles a Mortgage by a conditional sale in thus far as both of them belong to it class of securities within which the ownership of the property mortgaged is at risk of be transferred from the mortgagor to the mortgagee on default of payment.
Unlike a mortgage by conditional sale, an English mortgage the mortgagor ordinarily undertakes to pay the debt personally.
Moreover, in a very mortgage by a conditional sale, the mortgagee acquire only a professional ownership, while English mortgage, he acquires an absolute ownership.
• Equitable Mortgage:
A Mortgage by deposite of deed of conveyance is named as Equitable Mortgage.
Physical delivery of documents by the debtor to the creditor is mode of deposit. There could also be constructive delivery also.
There is no writing or other formalities are required. Thus,, for a legitimate mortgage by deposit of title, it’s not essential to place the deed into writing, but there must be an intension to require the deed as aa security for the debt and if there’s such intention, it’s sufficient to forma legitimate mortgage by deposit f deed of conveyance whether or not the deed isn’t in writing.
The essentials of Equitable mortgage are:
• Delivery of title deeds
• Existence of the debt
• Specified Delivery means delivery of possession as aresult of the agreement.
Document of title:
If document deposited shows no quite title within the depositor, no mortgage is made. it’s sufficient if the deed deposited valid is relate to the property.
• Anomalous Mortgage
Section 58(g) of T.P.Act defines Anomalous Mortgage. it’s composite mortgage formed by combination of two or more of primary style of mortgage. during this class of mortgage, the rights of the parties are governed by the terms of ttthe instrument.
A mortgage usufructuary by conditional sale is Anomalous mortgage as here mortgage is in possession as a usufructuary mortgage for a hard and fast period and if debt isn’t discharged at the expiry of period, he gets all rights of mortgage by conditional saleLike:
• A mortgage with possession containing also a covenant to pay the principle and also the interest.
• A mortgagor to repay the instalments with interest or to redeem at any time. The mortgagee to remains in possession. Held, it’s Anomalous Mortgage.
• Combination of mortgage where both are there simple and usufructuary when possession and interest both is transferred.
Mortgage And Charge:
Mortgage is different from charge as:
Section 100 to 101 of the Transfer of Property Act, 1882 deals with Charges of Immovable property. Section 58 of the transfer of property act, 1882 deals with Mortgage of immobile property.
A charge which is formed as security for the payment of cash might not always be for debt.
A Mortgage is usually created just for the payment of a debt.
Conclusion
The concept of mortgage is one among the important concepts under the Transfer of Property Act, 1882 section 58 because it helps in securing the debt to the mortgagor and also helps in redeeming the property as soon because the mortgagor pays back the number because of the mortgagee.
References:
Book:
1.Transfer of Property Act, 1882
2.Textbook on Transfer of Property Act, 1882 by Dr. Avtar Singh.
3.Textbook on Transfer of Property Act, 1882 by Abinav Misra.
Online Sources:
1. https://indiankanoon.org/doc/515323/
Case:
1.Ismail Kharti v/s Muljibhai Brahmabhatt
2.Neha sha v Murlidhar(1903).
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