Rights and duties of the mortgagor and mortgagee sheetal

Under the Guidance of
Submitted by
Sheetal Punekar
Created by
Jagannath R Ramapur

Rights of Mortgagor
 Redeem Of Property (S. 60)
 Obligation to transfer to third party instead of re-
transference to mortgagor (S. 60A)
 Right to inspection and production of documents
(S. 60-B)
 Accession to mortgaged property (S. 63)
 Mortgagor’s Power to Lease
(S. 65-A)
 Waste by mortgagor in possession
(S. 66)
 Improvements to mortgaged property (S. 63-A)

Rights of Mortgagor
 Redeem Of Property (S. 60) :-
As the loan is returned then a
mortgagor has a right to redeem the
property. All documents and the
mortgage deed should be returned to
the borrower.

Mortgagor’s Rights on
Redemption
The mortgagor’s rights on redemption
are,-
 delivery of the mortgage-deed and
documents of title relating to the
mortgaged property,
 possession, and
 reconveyance or acknowledgment.

Exercise of the right to redemption
The mortgagor’s right of redemption is
exercised,-
 by paying or tendering mortgage-
money to the mortgagee outside the
court i.e. privately;
 by depositing the amount in the court;
and
 by suit for redemption, payment or
tender.

English Law: Equity of
redemptions
 In the Middle Ages, the courts of common law
failed to give redress in certain types of cases
where redress was needed.
 The disappointed litigants petitioned the King,
who was the “fountain justice” for extraordinary
relief.
 The King, through his Chancellors eventually set
up a special court, the Court of Chancery, to
deal with these petitions.
 The Chancellor, in dealing with these petitions,
was not bound by strict rules of law but decided
them on grounds of equity, that is natural justice.
 The Court of Chancery was popularly known as
Court of Equity – A court where cases were
decided on the broad conception of fairness and
justice.

Indian Law
 Redemption involves two things:
(a) re-transfer of the interest which had
been originally transferred to the
mortgagee, and
(b) delivery of the possession.
 Both those things are done by virtue of
the terms of mortgage, and in
pursuance of an agreement between
the parties.
 Under Indian Law, the right of
redemption is a statutory right which
cannot be fettered by any condition
which impedes or prevents redemption.

Obligation to transfer to third party
instead of re-transference to mortgagor
(S. 60A)
 This Section has been added by the Amendment
Act of 1929 and is on the lines of S. 95 of the
English Property Act.
 The mortgagor has the right to direct the
mortgagee to transfer the mortgaged property to
a third party instead of transferring it to the
mortgagor.
 It defines the obligation of a mortgagee, when so
required, to transfer the mortgage-debt to a third
person named by the mortgagor.
 The right of the mortgagor and the obligation of
the mortgagee arises only when the mortgage
debt has become payable and the mortgagor has
fulfilled the conditions laid down in S. 60.

Right to inspection and
production of documents (S. 60-
B) The mortgagor has the right to
inspect the documents in the
possession of the mortgagee. But it
must be only at a reasonable time. He
can take copies from such documents.
 It is clear that a mortgagor has a right
to inspect and take copies of the
documents of title relating to the
mortgaged property which are in the
possession of the mortgagee.

Accession to mortgaged property
(S. 63)
 The mortgagor has the right to the
properties accrued by natural means like
accretion, etc..This right is called "Right
of Accession".
 The term ‘accession’ primarily denotes
physical accretions or additions whether
brought about by natural or artificial
means.
 The general rule is that where
mortgaged property in possession of the
mortgagee has received any accession,
the mortgagor, upon redemption, is

Legal Position before enactment
of S. 65-A
 It was held that a mortgagor in possession may
grant a lease conformable to usage in the
ordinary course of management, for instance, he
may create a tenancy from year to year in the
case of agricultural lands or from month to month
in case of houses.
 But he is not competent to grant a lease-
(a) On unusual terms, or
(b) to alter the character of the land or
(c) to authorize its use in a manner or for a
purpose different from the mode in which he
had himself used before he granted the
mortgage.
- Madan Mohan Singh v. Raj Kishore
(AIR 1917 Cal. 222: 21 C.W.N. 88.)

Mortgagor’s Power to Lease
(S. 65-A)
 The mortgagor has the power to
make lease also, but it must be with
the consent of the mortgagee. Such
lease must satisfy the prescribed
conditions.
 This section was added by S. 30 of
the Amendment Act of 1929, which
come into force on 1st April 1930.

Conditions
 The lease shall be such as would be made in the
ordinary course of management of the property
and in accordance with any local law, custom or
usage.
 The lease shall reserve the best rent that can
reasonably be obtained and no premium shall be
paid or promised by the leasee and no rent shall be
payable in advance.
 The lease shall operate from a date not later than
six months from the date on which it is made.
 In case the mortgaged property be a building, the
duration of the lease shall no case be more than
three years, and the lease shall contain a covenant
for payment of the rent and a condition of re-entry
on the rent not being paid within a time therein
specified.

Waste by mortgagor in
possession
(S. 66)
 The mortgagor has the right to
reasonable waste of the property but
he must not make permanent injuries
of destruction of the property or
reduce its value. If he does so, then
he must give additional security to the
mortgagee.

Improvements to mortgaged
property (S. 63-A)
 The mortgagor has the right to claim
improvement made by the mortgaged
properties.
The Amendment Act of 1929
introduced S. 63-A embodying the
principles of the English cases.

Rights of Mortgagor
 The mortgagor can avoid
consolidation by the mortgagee in the
mortgaged properties.
 The mortgagor has the right to
deposit the mortgage money in the
court, if there is any suit relating to the
property.

DUTIES OR LIABILITIES
OF MORTGAGOR

Duties of Mortgagor
 Defective Titles
 Public tax/Public charges
 Lease/rent

Duties or Liabilities of Mortgagor
 The mortgagor must indemnify the
mortgagee for the defective title to the
property. If any third person interferes, the
mortgagor must compensate the mortgagee
for the expenses incurred by him in protecting
the title.
The mortgagor must compensate the
mortgagee for payment of all taxes and public
charges. Similarly when the property the
mortgagor must pay all taxes and public
charges.
 When the mortgaged property is leased, the
mortgagor must direct the rent payable under
the lease, etc., to the mortgagee.

Rights of Mortgagee
Right to foreclosure or sale
(S. 67)
 Right to sue for mortgage-money
(S. 68)
Power of sale when valid (S. 69)
Right of accession - increased mortgaged
property.
 Right of accession - renewal of security.
 Mortgaged property is under lease
 Right for reimbursement
 Mortgaged for successive debts to
successive mortgagees.

Right to foreclosure or sale
(S. 67)
Selling Right :- If borrower fails to
return the loan in time then the
mortgagee has the right to sell the
property of the mortgagor. But it will be
sold and getting decree from the court.
Property will be sold by auction.
 At any time after the mortgage money
has become due, the mortgagee has
the right to obtain from the court, a
decree for foreclosure

Right to sue for mortgage-money
(S. 68)
The mortgagee has the right to sue for the
mortgage money in the following four cases.
a. When the mortgagor binds to repay the
money.
b. When the mortgagor's property is wholly or
partly destroyed by any cause other than
the wrongful act or default of the
mortgagee.
c. When the mortgagee is deprived of the
whole or part of his security.
d. When the mortgagee was entitled to
possession of the mortgaged property and
the mortgagor has failed to deliver it.

Power of sale when valid (S.
69)
The mortgagee has the power to sell the
mortgaged property without the intervention of
the court, on default of payment of mortgage
money by the mortgagor in the following three
cases,.
a) When the mortgage is English mortgage
between Non Hindus, Non Muslims, Non
Mohammedans and member of the race or sect
notified by the State Government to the Official
Gazette.
b) When Government is the mortgagee, with the
express provision of sale without intervention of
the court.
c) When the mortgaged property is situated at
Calcutta, Madras, Bombay or any other gazette
town or area.

Rights of Mortgagee
 The mortgagee has the right of accession to the
increased mortgaged property.
 The mortgagee has the right of accession to the
increased properties for renewal of security.
 If the mortgaged property is under lease, the
mortgagee is entitled for renewal of the lease for
purpose of security.
 The mortgagee has the right for reimbursement
with interest for the money spent for purposes
like preservation of mortgaged property etc.,.
 When a property is mortgaged for successive
debts to successive mortgagees a menses
mortgagee has the same rights against
mortgagee posterior to himself as he has against
the mortgagor.

Liabilities of Mortgagee
 Mortgagee is bound to sue
 To manage the property as a person of ordinary
prudence
 To collect the rents etc.,
 To pay Government revenue
 To make necessary repairs
 Not to commit ant act waste
 To apply the insurance money which he actually
receives in reinstating the property etc.,
 To keep proper accounts
 Fair occupation rent thereof after deducting the
expenses of management etc.,.
 To account for the receipts from the mortgaged
property

 A mortgagee is bound to sue on behalf of all the
mortgagees in respect of which the mortgage
money has become due in the absence of express
contract. During the continuance of the mortgage,
the mortgagee is bound.
 To manage the property as a person of ordinary
prudence would manage if it were his own.
 To use his best endeavor to collect the rents and
profits thereof.
 In the absence of a contract to the contrary, to pay
Government revenue and the other charges of a
public nature and all rents, out of the income of the
property.
 In the absence of a contract to the contrary, to
make such necessary repairs as the income of the
property permits.

 Not to commit ant act which is destructive or
permanently injurious to the property.
 When the whole or any part of the property is insured
against loss or damage by fire, in case of such loss or
damage to reinstate the insured property with the
money obtained from the insurance policy or to
discharge the mortgage debt with it, if the mortgagor so
directs.
 To keep clear, full and accurate accounts of all sums
received and spent by him as mortgaged and give them
to the mortgagor when asked.
 To debit receipts from the mortgaged property or where
such property is personally occupied by him a fair
occupation rent thereof after deducting the expenses of
management, the collection charges, revenue and costs
of repairs, first against the interest on the mortgage
money and then against the principal.
 To account for the receipts from the mortgaged
property. Such accounting of receipt from the property
shall be taken in lieu of interest on the principal money
given to the mortgagor.

A Special thanks to
for giving the opportunity

Rights and duties of the mortgagor and mortgagee sheetal

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