1
RIGHTS AND LIABILITIES OF MORTGAGER
INTRODUCTION
Mortgage is a conveyance of property, upon condition, as security for the payment of a debt or the performance of a duty, and to become void upon payment or performance according to the stipulated terms; also, the written instrument by which the conveyance is made or a State of being pledged; as, lands given in mortgage or to grant or convey, as property, for the security of a debt, or other engagement, upon a condition that if the debt or engagement shall be discharged according to the contract, the conveyance shall be void, otherwise to become absolute, subject, however, however, to the right of redemption or to pledge, either literally or figuratively; to make subject to a claim or obligation or a conditional conveyance of property as security for the repayment of a loan or put up as security or collateral or an agreement to give up an interest in something if you fail to perform some duty. In many cases, it means that you'll give up your home if you fail to repay your home loan as agreed. ou can use mortgage as a verb, meaning "to pledge". So to say a mortgage is the pledging of a property to a lender as a security for a mortgage loan. !hile a mortgage in itself is not a debt, it is evidence of a debt. It is a transfer of an interest in land, from the owner to the mortgage lender, on the condition that this interest will be returned to the owner of the real estate when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is a security for the loan that the lender makes to the borrower. "he term comes from the #ld $rench % dead pledge,% apparently meaning that the pledge ends &dies either when the obligation is fulfilled or the property is taken through foreclosure. In many countries it is normal for home purchases to be funded by a mortgage. In countries where the demand for home ownership is highest, strong domestic markets have developed, notably in Spain, the (nited )ingdom, the *ommonwealth of +ustralia and the (nited States. Mortgagee legally termed for the mortgage lender. "he main function of the mortgage is to provide security to the lender. "he lender loans the money and registers the mortgage against the title to the property. "he borrower
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gives the lender the mortgage as security for the loan, receives the funds, makes the reuired payments and maintains maintains possession possession of the property. property. "he borrower has the right to have the mortgage discharged from the title once the debt is paid. If the mortgagor fails to repay the loan according to the conditions set forth by the lender, then the mortgagee reserves the right to foreclose on the property. -orrower is termed as Mortgagor, who owes the obligation secured by the mortgage, and may be multiple parties. enerally, the debtor must meet the conditions of the underlying loan or other obligation and the conditions of the mortgage. I.
Definition S. 58
+ mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan, an e/isting or future debt, or the performance of an engagement which may give rise to a pecuniary liability. "he transferor is called a mortgagor, the transferee a mortgagee, the principal money and interest of which payment is secured for the time being are called the mortgagemone! , and the instrument by which the transfer is effected is called a mortgagedeed. II.
lements
"he
following
&1
"here
of
are must
the
a
essential be
a
characteristics transfer
#ortgage
of of
a
mortgage an
0
interest.
&2 &2 "her "heree must must be spec specif ific ic immo immova vabl blee prop proper erty ty int intende ended d to be mort mortga gage ged. d. &3 "he transfer must be made to secure the payment of a loan or to secure the III. III.
performance of a contract contract In ter terms ms of the the def defin init itio ion, n, the the fol follo lowi wing ng are are the the $%ara$teristi$s of a mortgage0
&1 + mortgage mortgage can be effecte effected d only on immovable immovable property. property. Immovable Immovable property property includes includes land, benefits that arise out of land and things attached to earth like trees, buildings and machinery. -ut a machine which is not permanently fi/ed to the earth and is shift able from one place to another is not considered to be immovable property. property. &2 + mortgage mortgage is the transfer transfer of an interest interest in the specific specific immovable immovable property property.. "his means means the owner transfers some of his rights only to the mortgagee. $or e/ample, the right to redeem the property mortgaged. &3 "he object object of transfer transfer of interest interest in the property must must be to secure a loan or performance performance of a contract which results in monetary obligation. "ransfer of property for purposes other
3
than the above will not amount to mortgage. $or e/ample, a property transferred to 4iuidate prior debt will not constitute a mortgage. &5 "he property property to be mortgaged mortgaged must be a specific specific one, i.e., i.e., it can be identified identified by its si6e, si6e, location, boundaries etc. &7 "he actual possession of the mortgaged property is generally generally with the the mortgager. mortgager. &8 "he interest interest in the mortgaged mortgaged property property is re9conveyed re9conveyed to the mortgager mortgager on repayment repayment of the loan with interest due on. In case, the mortgager fails to repay the loan, the mortgagee gets the right to recover the debt out
of
I&.
the
sale
proceeds
of
Transfer
the
mortgaged
of
property. Interest
"he right of the mortgagee is only an accessory right which is intended merely to secure the due
payment
of
the
debt.
Mortgage is simply a transfer of interest in the immovable property while the ownership still retains with the mortgagors. "hus, where a joint family property is subject to mortgage, there is no transfer of ownership and the coparceners being its lawful owners are competent to allot the mortgaged property in oral partition to any of the coparceners. "he coparcener to whom the mortgaged property is allotted becomes its absolute owner and is entitled to redeem the mortgage. "he words 'transfer of an interest' also bring out the distinction between 0 &i a mortgage and an agreement to mortgage, and &ii a mortgage and a charge. + mortgage is a transfer of an interest and creates a right in rem, but mere agreement that one person shall lend the money and the other would borrow it by way of mortgage, does not create any interest in the property intended to be mortgaged. Such an agreement is not even capable of specific performance, that is, the court cannot compel the parties to borrow or lend money. Such an agreement only gives rise to an obligation to pay damages. Since a mortgage creates a right in rem, such right is available available against all subseuen subseuentt transfere transferees es of the mortgaged mortgaged property irrespective irrespective of notice. "he
broad
distinction
between
a
mortgage
and
a
charge
is
99
&1 !hereas a charge only gives a right to the payment out of a particular immovable property without transferring any interest in the property a mortgage is in essence a transfer of an
4
interest
in
specific
immovable
property.
&2 a mortgage is good against a subseuent transferee and may be enforced against a bona fide purchaser for value with or without notice, while a charge is good only against a subseuent
transferee
&.
with
Spe$ifi$
notice.
immovable
propert!.
"he description of the property in the mortgage deed, if any, must at least be sufficient to identify
the
&I.
property.
Consideration
of
mortgage.
"he consideration of a mortgage may be either 0 &1 money advanced or to be advanced by way of loan; &2 an e/isting or future debt; or &3 the performance of an engagement giving rise &II.
to ffe$t
of
fail're
pecuniary of
mortgagee
to
advan$e
liability. amo'nt
'nderta(en.
+ mortgage under the "ransfer of :roperty +ct is a transfer of an interest of an interest in the land mortgaged, and not a mere contract. #nce a document transferring immovable property has been registered, the transaction passes out of the domain of a mere contract and falls into one
of
a
conveyance.
"herefore, a transaction of mortgage formally, e/ecuted does not become void or ineffective merely merely becaus becausee the mortga mortgage ge fails fails to advanc advancee the amount amount of money money undert undertake aken n to be advanced by him. If, without advancing the amount agreed to be advanced, he sues on the title created under the deed of mortgages the court will not award him a decree for anything more than what he has advanced. -ut this does not mean that the mortgage is invalid RI)*TS +ND I+-IITIS O #ORT)+)OR #ORT)+)OR +. Rig%t of mortgagor mortgagor to redeem redeem /Se$tion01 /Se$tion012 2 of T3 +$t +$t 48867 -. Redemption of portion portion of mortgaged mortgaged propert! propert! /Se$tion012 of T3 +$t 48867 48867 C. Obliga Obligatio tion n to transf transfer er to t%ird t%ird part! part! instea instead d of retr retransf ansfer eren$ en$ee to mortga mortgagor gor /Se$tion012+ of T3 +$t 48867 D. Rig%t to inspe$tion and prod'$tion prod'$tion of do$'ment. /Se$tion012/Se$tion012- of T3 +$t 48867 . Rig%t to redeem redeem separatel! or sim'ltaneo'sl! /Se$tion014 of T3 +$t 48867 . Rig%t Rig%t of 's'fr'$ 's'fr'$t'a t'ar! r! mortga mortgagor gor to re$ov re$over er possessi possession on /Se /Se$ti $tion0 on0 1 of T3 +$t +$t 48867
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). 3oer to deposit in $o'rt mone! mone! d'e on mortgage /Se$tion089 of T3 T3 +$t 48867 *. +$$ession to mortgaged propert!/ Se$tion0 Se$tion0 19 of T3 +$t 48867 I. Improveme Improvements nts to mortgaged mortgaged propert!/ propert!/ Se$tion0 Se$tion0 19+ of T3 +$t 48867 48867 :. Reneal Reneal of mortgaged mortgaged lease. lease. /Se$t /Se$tion0 ion0 1; of T3 +$t 48867 48867 <. Implied Contra$ts b! #ortgagor = / Se$tion0 Se$tion0 15 of T3 +$t 488 67 . #ortgagor> #ortgagor>ss poer to lease. /Se$t /Se$tion0 ion0 15+ of T3 +$t 48867 #. ?aste ?aste b! #ortgagor in possession /Se$tion0 11 of T3 +$t 48867 +.Rig%t of mortgagor to redeem0
+ccording to s 8; of ": +ct, at any time after the principal money has become due, the mortgagor has a right, on payment or tender, at a proper time and place, of the mortgage9 money, to reuire the mortgagee9 a to deli delive verr to the the mort mortga gago gorr the the mort mortga gage ge9d 9dee eed d and and all all docu docume ment ntss rela relati ting ng to the the mortgaged property which are in the possession or power of the mortgagee . b where the mortgagee is in possession of the mortgaged property, to deliver possession thereof to the mortgagor, c at the cost cost of the mortgagor mortgagor either either to re9transf re9transfer er the mortgage mortgaged d property property to him or to such third person as he may direct, or to e/ecute and &where the mortgage has been effected by a registered instrument to have registered an acknowledgement in writing that any right in derogation of his interest transferred to the mortgagee has been e/tinguished. d +cknowled +cknowledgeme gement nt that right right has has been e/tingu e/tinguished ished.. e
3OSITION IN T* TR+NSR O 3RO3RT@ +CT.
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(nlike
the immovable property. "he mortgagor transfers only an interest in favour of mortgagee and not the whole interest in the property. . Resid'ar! oners%ip. +fter creating an interest in favour of mortgagee, the mortgagor
still has the remaining interest. "he remaining interest is called the residuary ownership of the mortgagor in the mortgage9property. It is the residuary ownership, by virtue of which, the mortgagor has the right to redemption vested in him. 9. 3'rpose is onl! se$'ring t%e pa!ment of debt. +s per the provisions of the "ransfer of
:roperty +ct, in the transaction of mortgage, since there is a transfer of an interest of the immovable property by the mortgagor for securing the loan, he is entitled to get back that interest on the repayment of the loan. -y making the payment of the loan with its interest, the mortgagor becomes entitled to redeem, that is call back the >interest= given to the mortgagee as security for repayment. ;. 3rin$iples of eA'it!, B'sti$e and good $ons$ien$e. Mortgagor neither intends nor desires
that the property should go absolutely to mortgagee. "herefore if the mortgagee is unable to repay the debt on a fi/ed date and there is some delay, the law must e/tend his right to redemption upto a reasonable time. :rinciples of euity, justice and good conscience do not allow that a transaction which is of borrowing nature should become an absolute conveyance, only on the ground that the debt was not paid on the fi/ed date. It is therefore, an inherent right of every mortgagor, laid down in sec. 8;, irrespective of the kind of mortgage.
UIT@ O RD#3TION.
"he right of redemption of the mortgagor under sec. 8; of the "ransfer of :roperty +ct is based on the euity of redemption under
7
mortgagor=s right to redeem the mortgage by making payment, even after the due date is known as euity of redemption. "he *hancery *ourt introduced this right in order to do justice with cases cases on mortgage decided under the common common law. law. 3rior position at Common a.
+t common law, the mortgage was the transfer of legal estate &absolute interest, subject to a condition. "he condition was >nonpayment of loan upto fi/ed date=, which if fulfilled, the mortgaged property belonged absolutely to the mortgagee. *ommon law treated the non9 payment of debt upto a specified period as penalty for the mortgagor. "he common law gave no relief to the mortgagor, who failed to repay the debt upto the specified period, even though he was ready to repay within few days after the specified period. "hus, in default of the repayment the mortgagor lost all his rights in his immovable property. property. "his situation was e/ploited by the money9lenders, money9lenders, by not accepting the money on the due date. "hey knew that if somehow the loan with interest remained unpaid upto the fi/ed date, they will become owner of the property in lieu of the small sum of money, which the debtor took in his urgent need. Role of C%an$er! Co'rts.
Soon the *hancery *ourts reali6ed that the main purpose of the mortgage is to keep the property as a security to the moneylender for the repayment of money. "herefore, "herefore, the money9 lender should not be given any legal right to hold on the property absolutely if the mortgagor was ready to repay the debt within reasonable time after the e/piry of the due date. "hus, the right which was denied by the *ommon 4aw was given to the mortgagor by the *ourts of <uity. "his right of the mortgagor to redeem even if he was in default was known as euity of redemption. "hus, this very principle evolved by the *hancery *ourts went against the common law. <uity started with the notion that stipulation as to time &fi/ed date for repayment should not be treated as penalty. "he *ourts even held it to be the essential character of every mortgage. "hey provided further that it was an important right of the mortgagor and it could not be denied in anymanner, not even e/press agreement of the parties themselves. <uity declared that >once a mortgage, always a mortgage=.
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ONC + #ORT)+) +?+@S + #ORT)+).
"his ma/im implies that the mortgagor=s right of redemption would not be defeated by any agreement to the contrary, even if the mortgagor himself has agreed to it. "he ma/im simply denied the validity of any stipulation in the mortgage deed, which defeats the mortgagor=s right of redemption. In other word, a transaction, which at one time is mortgage, could not ceas ceasee to be so by havi having ng any any stip stipul ulat atio ion n in the the mort mortga gage ge deed deed inte intend nded ed to defe defeat at the the mortgagor=s right of redemption. "he underlying principle of this ma/im was stated by 4#?@ A
euity of redemption, a mortgage suit can be instituted by any other person who has a right to euity of redemption. "he right of redemption is the inalienable right of the mortgagor ETofal +%med Contra$tor &. +bd'r Ra%im E Ot%ers, 18 -4@ &+@ 18;F. -esides the mortgagor any of the following persons may also sue for redemption09 Section G1 of ": a +ny interested person in the mortgaged property, b +ny +ny surety for the payment payment of the mortgaged debt; or c +ny creditor of the mortgagor who has obtained a decree for sale of the mortgaged property.
9
CO) ON RD#3TION0
"he right of redemption continues although the mortgagor fails to pay the debt at the due date. +ny provision inserted in the mortgage9deed which has has the effect of preventing or impeding impeding this right is void as a clog on redemption. "his view was substantiated by 4IB@4< M. ?. in Stanle! v. ?ilde #'rarilal v. Dev(aran Dev(aran, wher "he "he Supr Suprem emee *our *ourtt cons consid ider ered ed this this rule rule in #'rarilal wheree the the clau clause se
incorporated in the mortgage deed provided that the amount due under the mortgage should be paid within 17 years years whereupon the property property would be redeemed. redeemed. $urther it provided that in case payment was not made within that period, mortgagee would become the owner of the property. "he Supreme *ourt affirming affirming the decision decision of the ?ajasthan Aigh *ourt, held that any stipulation contained in the mortgage deed, which unreasonably restrained the mortgagor=s euity of redemption can be ignored by the court subject to the general law of limitation prescribed in that behalf. aF ong Term for Redemption . It is not necessarily true that a long term for redemption is
always a clog on redemption. Aowever, if the length of the term is found to be oppressive, redemption would be allowed before the e/piry of that period. + period of G; years for redemption has been held to be unreasonable and a clog on redemption1H. + period of G; years for redemption has not been held to be a clog on redemption1. bF Condition of Sale in Defa'lt. + condition in the deed that has the effect of converting a
mortgage into a sale is invalid as a clog on redemption. Such condition converts a mortgage into a sale. <uity disfavours a mortgage to be converted into a sale. It is therefore void. In )'lab C%and S%arma v. Sarasati Devi, there was a mortgage by conditional sale. "he
mortgagor was given a time of four years for repayment of the debt. "he mortgage property was on lease. "he deed contained a stipulation that in case the mortgagee receives any notice from any public authority for breach of covenants of lease within four years term, the mortgagee shall become owner of the property. "he ape/ court held this stipulation to be a clog on mortgagor=s mortgagor=s right of redempti redemption on and therefore therefore not to be enforced. enforced. -ut after the
10
e/ecution of the deed, the parties agree to the sale of the property that does not amount to be a clog on the redemption. $F Condition 3ostponing Redemption in Defa'lt on a Certain Date.
"he condition or stipulation that postpones the mortgagor=s right of redemption in case of default of payment on a certain date, is regarded a clog on redemption as it bars or restricts the redemption. In #o%d. S%er <%an v. Set% Sami Da!al, the mortgage was for a term of five years. + stipulation in deed said that if the mortgagor failed to pay the money, the mortgagee was entitled to take possession of the property for ne/t 12 years, during which the mortgage could not be redeemed. "he :rivy *ouncil held the stipulation to be a clog on redemption for it hindered the right of redemption. dF Restraint on +lienation. + condition, which restraints the mortgagor from transferring
mortgage9property is a clog. In a mortgage, the mortgagor only transfers an interest in the property and still has residuary ownership. Ae has every right to transfer the property by sale, gift etc and can even, effect another mortgage. eF Collateral benefits to #ortgagee . *ollateral benefits to mortgagee are not necessarily
clog on the redemption. In order to establish that the collateral benefits are clog on the redemption it is necessary that0 a. "he collateral benefits given to the mortgagee are unfair and unconscionable, and b. "he collateral benefits to mortgagee are part of the transaction of mortgage and not an independent benefit. In
11
loan having been paid off by the company in Kanuary 1G13, in accordance with the agreement, the lenders claimed to e/ercise their option of pre9emption notwithstanding the payment off of the loan. "he Aouse of 4ords held the stipulation for the option of pre9emption formed no part of the mortgage transaction, but was a collateral contract entered into as a condition of the company obtaining the loan. It was not a clog on the euity of redemption or repugnant to the right to redeem and the lenders were entitled to an injunction restraining the company from selling sheepskins to any person other than the lenders in breach of the agreement fF 3enalt! in Case of Defa'lt. +n agreement which amounts to penalty in case of non9
payment of debt is a clog on redemption. C+SS ON UIT@ O RD#3TION.
In Set% )angad%ar v. S%an(ar al and Ors , it was admitted that the transaction was that of a mortgage and Section 8; of the "ransfer "ransfer of :roperty +ct +ct was applicable. "he *ourt held that therein the term of mortgage was 7 years and there e/isted no stipulation entitling the mortgagor to redeem during that term which had not e/pired. "he document in uestion was held by this *ourt to be containing a stipulation creating a clog on the euity of redemption which was found to be illegal. In 3omal
12
So, any condition imposed in the deed of mortgage itself which places any restrictions on the right of redeeming the mortgage is a clog in the euity of redemption and, as such, repugnant to law and void / #ir Gaman &. +s%raf (%an, 3D 4H5HF. er$ise of t%e rig%t of redemption0
"he mortgagor=s right of redemption is e/ercised,9 i. -y paying or tendering mortgage9money to the mortgagee outside the court, i.e. privately; ii. -y depositing the amount in the court; and iii. -y a suit for redemption, payment or tender. "ender means an unconditional offer to pay the money under such circumstances that the mortgagee may receive the money there. &Section 3 of the *ontract +ct, +ct, 1H2. ting'is%ment of rig%t of redemption0
"he mortgagor=s right of redemption is e/tinguished0 a -y foreclosure §ion 8H; b !hen the mortgagee mortgagee has e/ercised e/ercised power of sale sale §ion 8; c !hen it becomes barred under the 4imitation +ct, +ct, 1G;.
C"he right of mortgage9deed can come to an end only in manner known to lawD. 9 :a!a Sing% &.
13
Section 8; of ": +ct also provides that a person interested in a share only of the mortgaged property is not entitled to redeem his own share only, on payment of a proportionate part of the amount remaining due on the mortgage, e/cept only where a mortgagee, or, if there are more mortgagees than one, all such mortgagees, has or have acuired, in whole or in part, the share of a mortgagor. C.Obligation to transfer to t%ird part! instead of retransferen$e retransferen$e to mortgagor 0
Section 8;9+ states that9 C1 !here a mortgagor is entitled to redemption, then, on the fulfilment of any conditions on the fulfilment of which he would be entitled to reuire a re9transfer, he may reuire the mortgagee, instead of re9transferring the property, to assign the mortgage9debt and transfer the mortgaged the mortgagee shall be bound to assign and transfer accordingly. &2 "he rights conferred by this section belong to and may be enforced by the mortgagor or by any encumbrancer notwithstanding an intermediate encumbrance; but the reuisition of any encu encumb mbra ranc ncer er shal shalll prev prevai aill over over a reu reuis isit itio ion n of the the mort mortga gago gorr and, and, as betw betwee een n encumbrancers, the reuisition of a prior encumbrancer shall prevail over that of a subseuent encumbrancer. &3 "he provisions of this section do not apply in the case of a mortgagee who is or has been in possession.D D.Rig%t to inspe$tion and prod'$tion of do$'ments 0
Section 8;9- states thatC+ mortgagor, as long as his right of redemption subsists, shall be entitled at all reasonable times, at his reuest and at his own cost, and on payment of the mortgagee's costs and e/penses in this behalf, to inspect and make copies or abstracts or, e/tracts from, documents of title relating to the mortgaged property which are in the custody or power of the mortgageeD. "his section makes it clear that a mortgagor has a right to inspect and take copie copiess of docume documents nts of title title relati relating ng to the mortgage mortgaged d proper property ty which which are in possession of the the mortgagee. "his "his right subsists subsists so long as his right right of redemption subsists. subsists.
In the case of :a!a Sing% &.
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In &.3ail! &. <. +'g'st!, +I? 1G8H )er. 25H a full bench of Aigh *ourt observed that0 C"here is no debate on the basis of which right of redemption come to an endD.
. Rig%t to redeem separatel! or sim'ltaneo'sl!0
+ccording to s 81 of ": +ct, +ct, a mortgagor who has e/ecuted two or more mortgages in favour 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, separately, or any two or more of such mortgages together. In the case of #'%ammad *ossain &. Ina!at +li, 3D 4H5 a%.9J it was held that C If the plaintiffs wish to redeem the first two mortgages they must redeem them entirely and cannot ask for their own share only. "hey must pay the entire mortgage money and if that is so, they must obtain the entire property under the mortgageD.
.Rig%t .Rig%t of 's'fr'$t'ar! mortgagor to re$over possession0
Section 82 of ": +ct provides that in the case of a usufructuary mortgage, the mortgagor has a right right to recove recoverr posses possessio sion n of the the proper property ty togeth together er with with the the mortga mortgage9 ge9dee deed d and all documents relating to the mortgaged property which are in the possession or power of the mortgagee,9 a where the the mortgagee mortgagee is authorise authorised d to pay himself himself the mortgage9m mortgage9money oney from the the rents and profits of the property,9when property,9when such money is paid; b where the mortgagee is authorised to pay himself from such rents and profits or any part thereof a part only of the mortgage9money,9when mortgage9money,9when the term &if any prescribed for the payment of the mortgage9money has e/pired and the mortgagor pays or tenders to the mortgagee the mortgage9money or the balance thereof or deposits it in court. ).+$$ession to mortgaged propert!0
Section 83 says that9 C!here 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.
15
+cces +ccessio sion n acuir acuired ed in virtue virtue of transf transferr erred ed owners ownership hip00 !here !here such such access accession ion has been been acuired at the e/pense of the mortgagee, and is capable of separate possession or enjoyment without detriment to the principal property, the mortgagor desiring to take the accession must pay to the mortgagee the e/pense of acuiring it. If such separate possession or enjoyment is not possible, the accession must be delivered with the property; the mortgagor being liable, in the case of an acuisition necessary to preserve the property from destruction, forfeiture or sale, or made with his assent, 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 fi/ed, at the rate of nine percent. per annum. In the case last mentioned the profits, if any, arising from the accession shall be credited to the mortgagor. !here the mortgage is usufructuary and the accession has been acuired at the e/pense of the mortgagee, the profits, if any, arising from the accession shall, in the absence of a contract to the contrary, be set off against interest, if any, payable on the money so e/pendedD. "he term CaccessionD primarily denotes physical accretions or additions whether brought about by natural or artificial means "he general rule is that where mortgaged property in possession of the mortgagee has received any accession, the mortgagor, upon redemption, is entitled to such accession. "his rule is only an application of the euitable principle enacted in section G; of the "rusts +ct, +ct, 12. Se$tion H2 of t%e Tr'sts +$t,488 sa!s0 C!here a tenant for life, co9owner, mortgagee or
other ualified owner of any property, by availing himself of his position as such, gains an advantage in derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property, gains any advantage, he must hold, for the benefit of all persons so interested, the advantage so gained, but subject to repayment by such persons of their due share of the e/penses properly incurred, and to an indemn indemnity ity by the same same person personss agains againstt liabil liabiliti ities es proper properly ly contra contracte cted, d, in gainin gaining g such such advantage.D ?a!s ?a!s in %i$% a$$ession arise0
+ccession or accretion mat arise in any one of the following ways0
16
I. Reasonable a! II. +rtifi$ial a! I. Reasonable a!0 "he general rule is that reasonable or natural accession to the mortgaged
property are subject to redemption. $or instance, where the area of a village mortgaged without specification of boundaries was increased as a survey settlement, the mortgagor was held to be entitled to the increase. II. +rtif +rtifi$i i$ial al a!0 a!0 +rtific rtificial ial or acui acuired red acces accessio sions ns have have been been princi principle ple proper property ty,, the
mortgagor desiring to take the accession must pay to the mortgagee the e/pense of acuiring it. $or instance, where the mortgagee, during the continuance of the mortgage sets up a temporary structure on the mortgaged property, the mortgagor, if he desires to take it, must pay the cost of the structure structure to the mortgagee. mortgagee. &b Inseparable accessions0 If separate possession or enjoyment is not possible, the accession must be delivered with the property. T%e mortgagor is bo'nd to pa! $ompensation onl! in to $ases0 K4F where the acuisition was necessary to preserve the property from destruction, forfeiture
or sale; KF where it was made with the mortgagor=s consent.
In these two cases, compensation, i.e. , the proper cost of acuisition should be paid in addition to the principle money with interest at the same rate is payable on the principle or, where no such rate is fi/ed, at the rate of nine percent per annum & Lide Lide Sec. 83, para, 2.
Contrast it% Se$. 81 E 8J of S+T +$t0 +$t0
Section 8 of S+" +ct deals with dilluvion and says that the right, title and interest of the original tenant or his successor9in9interest in the land lost by dilluvion shall subsist if such land re9appear in situ within thirty years of their loss. Aowever, this provision will not apply to the cases where re9appearance of land takes place because of any artificial or mechanical process.
17
Sectio Section n H deals deals with with alluvi alluvion on and says when when any land has been gained gained by acces accessio sion n &alluvion, whether from the recess of a river sub9divided into0 &a Separable, and &b Inseparable &a Separable accessions0 !here the accession is capable of separate possession or enjoyment without detriment to the or of the sea, it shall not be considered as an increment to the holding or tenancy to which it may be anne/ed rather it will vest to the government as khas land. So, it appears that natural accessions will vest to the government. .Improvements to mortgaged propert!0
Section 839+ says that, C&1 !here mortgaged property in possession of the mortgagee has, during the continuance of the mortgage, been improved, the mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be entitled to the improvement; and the mortgagor shall not, save only in cases provided for in sub9section sub9section &2, be liable to pay pay the cost thereof. thereof. &2 !here 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 to prevent the security from becoming 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 fi/ed, at the rate rate of nine nine per per cent cent.. :er :er annu annum, m, and and the the prof profit itss if any any, accr accrui uing ng by reas reason on of the the improvement shall be credited to the mortgagor.D mortgagor.D
I.
enera enerall rule0 rule0 Sub9s Sub9sect ection ion &1 &1 lays lays down down the gener general al rule rule that that ordinar ordinarily ily a mortg mortgage age is is not at liberty to make improvements and charge the mortgagor therewith. !ith !ith this end in view view,, the the sub9s sub9sec ecti tion on laid laid down down that that wher wheree mort mortga gage ged d in poss posses essi sion on of the the mortga mortgagee gee has been been improv improved, ed, the mortga mortgagor gor upon upon redemp redemptio tion n is entitl entitled ed to the
18
improvement. "he object is to prevent mortgagee from spending large sums of money and then charging the mortgagor for it and in conseuence make it impossible for him to redeem. II.
• •
deterioration, or !ass necessary to prevent the security from becoming insufficient, or !a !as made in compliance with the lawful order of any public servant or public authority.
In the case of State -an( of 3a(istan &. <%aledar #a, 4; DR J95, it was held that, CMortgagor is liable to pay cost for improvement when any when any of the tests under the section is fulfilled.D
:. Reneal of mortgaged lease 0 Se$ 1;
!here 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
<. Implied Contra$ts b! #ortgagor0se$ 159In the absence of a contract to the contrary, the
mortgagor shall be deemed to contract with the mortgagee &a
that that the intere interest st which which the mortga mortgagor gor has power power to transf transfer er 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 &c
that that the the mort mortga gago gorr will will,, so long long as the the mort mortga gage geee is not not in possession of the mortgaged property, pay all public charges accruing due in respect of the property;
19
&d
and, where the mortgaged property is a lease, that the rent payable under under the lease lease,, the condit condition ionss contai contained ned therei therein, n, and the contra contracts cts 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 e/ists 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 observ observee the contract contractss bindin binding g on the lessee lessee,, and indemn indemnif ify y the mortgagee against the claims sustained by reason of the nonpayment of the said rent or the non9performance or non observance of the said conditions and document;
&e
and, where where the mortgage mortgage is a second second or subseue subseuent nt
"he benefit of the contracts, mentioned in this section shall be anne/ed 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.
. #ortgagor>s poer to lease 0se$ 15+
.9&1 Subject to the provisions of subsection &2,a
mortgagor, while lawfully in possession of the mortgaged property, shall have power to make leases thereof which shall he binding on the mortgagee. &2 &a
20
&d
the date on which it is made. &e
In the case of a lease of buildings, whether leased with or without the land on
which they stand, the s duration of the lease shah in no case, e/ceed three years, and the lease shall contain a covenant for payment of the rent and a condition of re9entry on the rent not being paid within a time therein specified. specified. &3
"he provisions of sub9section&1 apply only if and as far as a contrary intention
is not e/pressed in the mortgage deed; and the provisions of sub9Section&2 maybe varied or e/tended by the mortgage deed and as so varied and e/tended shall, as far as may be, operate in like manner and with all like incidents, effects and conseuences, as if such variations or e/tentions were contained in that sub9section.
#. ?aste b! #ortgagor in possession0 se$ 11 + mortgagor in possession of the mortgaged
property is not liable to the mortgagee far 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.
planation.9+ security is insufficient within the meaning of the section unless the value of
the mortgaged property e/ceeds by one9third, or ,if consisting of buildings e/ceeds by one9 half, the amount for the time being due on the mortgage. iabilities
$ollowing KiFiabilit!
of
t% e
are the
mortgagor.
liabilities of
to
transfer
the valid
mortgagor. interest
"he "he mort mortga gago gorr is liab liable le to tran transf sfer er vali valid d inte intere rest st to the the mort mortga gage geee in resp respec ectt of the mortgage property. KiiFiabilit!
to
defend
title
"he "he mort mortga gago gorr is unde underr liabi iabili lity ty to defe efend his his own own titl titlee if he is in pos possessi ession on of mortgage property and if mortgagee is in possession he must enable him to defend his property.
21
KiiiFiabilit!
to
pa!
p'bli$
$%arges
It is liability of the mortgagor to pay the public charges so long as the mortgagee is not in possession. KivFiabilit!
to
pa!
rents
!her !heree the the mort mortga gage ge prop proper erty ty is a leas leasee it is liab liabil ilit ity y of mort mortga gago gorr to pay pay the the rent. rent. KvF4iability
to
pay
interest
and
other
encumbrances0
It is liability to pay interest on the prior mortgage and discharge of such encumbrances at the proper time where the the mortgagee is a subseuent of secondmortgage. secondmortgage. Con$l'sion0
"hus Mortgage is a transfer of an interest in specific immovable property as a security for the repaym repayment ent of a moneta monetary ry liabi liabilit lity. y. "his liabil liability ity could could be arisin arising g out of money money alread already y advanced or to be advanced; it could be future debt or it could be pecuniary liability arising out of the non9performance of any engagement. + mortgage corresponds to the Aypotheca of ?oman 4aw. "he creditors, on the failure of the debtor to pay the debt, could being the debtor=s property to sale and recoup him. "o conclude it can be said that the provisions of the "ransfer "ransfer of :roperty +ct, 12 relating to mortgage successfully successfully met the e/pectation and demand of the mortgagor and mortgagee though it had many limitations.
