A mortgage is one of the broad concepts in the Transfer of Property Act, 1882. Because it not only defines the concept of mortgage but also defines the right and liability of Mortgager and Mortgagee. It applies the principle of equity to bring justice to society. Mortgager plays the role of the creditor (who gives the money) and Mortgagee plays the role of the debtor (who takes the money with the exchange of security). Mortgage and pledge both are secure debt but there is a certain difference. A mortgage is a debt against immovable property like land which is attached to the earth, Building, etc. Pledge is a debt against movable property like gold loan etc. In the Transfer of Property Act, 1882 Mortgage is defined in Chapter IV. Mortgage of property not simply creates the right of sale but after the default of repayment by the Mortgagor is created the right of sale under the principle of equity. A mortgage is a security given by the Mortgagor to Mortgagee not more than that, as a result, it only creates interest on the Mortgagor’s property by the Mortgagee.
The concept of Mortgage defines under section 58(a) of the Transfer of Property Act. A mortgage is the security of a deal between Mortgagor and Mortgagee. The mortgagor is who takes the loan and gives his property as a security to Mortgagee. And Mortgagee is who gives the loan and gets and interest over the Mortgagor property. For example, Rahul has landed in a village named “X”. Rahul needs some money to start a business, as a result, he Mortgages his land as security to Raja. And Rahul takes money from Raja. In this illustration Rahul is Mortgagor and Raja is Mortgagee.
Essentials conditions of Section 58(a) are:
There must be a transfer of an interest-only;
In the mortgaged property, the mortgagee only has the interest to recovery his or her money. Mortgagee does not have an absolute interest over the property. In the case of Ali Hussain v. Nilla Kanden, (1864) 1Mad. HC 356, the court held that in the mortgaged property after transferring the property to the mortgagee, the mortgagor has the vested interest over the property.
The transfer of interest must be immovable property;
The immovable property must be specified in the deed. And the mention of property in such a way that can be specified by the person without any doubt. In the case of Narayana v. Bolaguruswami, AIR 1924 Mad. 187, it was held that if anything attached to the earth with the mortgaged property then it will be included in the property. But if anything is attached to the earth with mortgaged property for not as a permanent beneficiary than it will be excluded from mortgage property.
The transfer of interest must be performed on the security of the loan or performance of a contract
A mortgage is working as a security of debt. Mortgage of property is done by the mortgagor to mortgagee. In this transaction, loan maybe three forms; first in the terms of money, which may give as an advance. Second is future debt or maybe present debt. The third is, it may be a certain performance that creates the pecuniary liability.
Types of Mortgage
Classification of mortgage is made on the basis of the nature of a mortgage. Different types of mortgage are creating different types of liabilities and rights. Difference types of mortgage are respectively;
A simple mortgage is defined in section 58(b) of the TP Act1882. In this simple mortgage, the mortgage has only the right to sell the mortgaged property. The essentials conditions of section 58(b) are:
- Mortgagor transfers his property as a mortgagee to the mortgage for taking a loan.
- The mortgagee has no right of possession over the mortgaged property.
- The mortgagee has the right to hold the mortgaged property for the non-payment of the loan.
Mortgage by conditional sale
Mortgage by conditional sale is defined under the section of 58(c) of the TP Act 1882. The essentials conditions of section 58(c) are:
- There must be an ostensible sale of immovable property which means there is an apparently look like a sale of property between the mortgagor and mortgagee but in reality, there is no sale.
- Non-payment of mortgage money the apparently looks like a sale will have become the absolute sale of mortgage property.
- After the payment of mortgage money, the sale becomes void. Or the buyer shall transfer the property to the seller.
- The conditions must be embodied in the document which affects the sale.
Usufructuary Mortgage is defined under the section of 58(d) of the TP Act 1882. In this usufructuary mortgage, the mortgagee has the right over the mortgaged property. Essentials conditions defined under section 58(d) are:
- Mortgagor delivers the possession of mortgage property to the mortgagee.
- The mortgagee has the right to enjoy the mortgage property benefits until and unless dues are paid.
- Mortgagee can’t sue for sale the mortgaged property.
In this usufructuary mortgage, registration is necessary if the property value is more than 100 or 100.
English Mortgage is defined under the section of 58(e) of the TP Act 1882. The essentials conditions of section 58(e) are:
- Mortgagor gives absolute ownership over the mortgaged property to the mortgagee.
- The mortgagor is bound to pay the mortgage money on a certain date.
- The mortgagee will transfer the property to the mortgagor after clear his/her dues of payment.
Mortgage by deposit of title-deeds
Mortgage by deposit of title-deeds is a peculiar kind of mortgage that is defined under section 58(f) of the TP Act 1882. In this mortgage, execution deed is not necessary. Mere deposit of title deed to the mortgagee is enough to complete the transaction of the mortgage. Essential conditions of section 58(f) are respectively;
- Mortgager for debt securing the mortgaged property
- Mortgage property is the title deed of immovable property.
- There must be a territorial restriction in this mortgage; this type of mortgage will be applicable in certain specific towns only.
Anomalous Mortgage is a mortgage which is not included the mentions form of a mortgage. It is defined under section 58(g) of the TP Act 1882. Like an example where the mortgage is the mixed form of simple and usufructuary mortgage is called an anomalous mortgage. “A” is the owner of a property name “x”. Due to certain reasons “A” needs money. As a result, “A” take a loan from “B” and give his property “X” to “B” as a mortgaged property. And from the property of “X” which profit will become that will be adjusted with as an interest of loan taken by “A”. So, it is neither a simple mortgage, not a usufructuary mortgage. It is called an Anomalous Mortgage. For this mortgage attestation is mandatory.
Mode of complete Mortgage
Section 59 of the TP Act 1882 defines the mode of the complete mortgage. There are three modes of complete the mortgage, those are respectively;
In the simple mortgage, the transaction will be effective by the registered document even though the sum assured is less than 100. But in all other mortgages except the mortgage by deposit of title deeds registration is required if the sum assured is 100 or more than 100. Registration must be in writing and attestation must be done by the two competent persons, signed by the mortgagor and duly registered according to by the Registration Act. If registration is necessary but not done then under section 100 of the TP Act can’t chargeable.
Delivery of possession
In the case of usufructuary mortgage, English mortgage, mortgage by conditional sale is the sum assured is less than 100 than the mere delivery of mortgaged property is enough to constitute the transaction of the mortgage. In this case, registration is an option not compulsory. Mere delivery of possession will constitute as a valid mortgage. Except for simple mortgage and mortgage by deposit of title deeds, if the secured money is more than 100 or 100 than registration is compulsory.
Deposit of title-deeds
In the case of mortgage by deposit of title deeds, oral transaction and mere delivery of title deeds of immovable property is enough to constitute the valid mortgage.
Mortgage of property is nothing but the security of the debt and it helps to bring trust between the mortgagor and mortgagee. Various types of mortgage are helps to created various transactions clearly. According to the place, a circumstanced mortgage of property follows defenses rules to constituted a valid transaction of mortgage property. So, the mortgage is nothing but a transaction to fulfill certain requirements with valid security provide to the party.
Author: Sonali Gorai,
Adamas University/ 3rd Year/ Perusing BALLB(H)