Mortgage / Morte Gage /

A 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 existing or future debt, or the performance of an engagement which may give rise to a pecuniary liability. Section 58 of the Transfer of Property Act, 1882 defines mortgage and specifies six types. The mortgagor (borrower) retains ownership but transfers a security interest to the mortgagee (lender); on repayment, the mortgage is discharged and the full ownership reverts to the mortgagor.

The six types of mortgage under Section 58 TPA: (1) Simple Mortgage (Section 58(b)) — no delivery of possession; mortgagor binds himself to repay and gives mortgagee a right to have the property sold on default — court sale, no possession; (2) Mortgage by Conditional Sale (Section 58(c)) — property appears to be 'sold' on condition that if mortgage is repaid by a date, the sale becomes void; (3) Usufructuary Mortgage (Section 58(d)) — mortgagee takes possession and receives rents and profits in lieu of interest until debt is repaid; (4) English Mortgage (Section 58(e)) — mortgagor binds himself to repay on a specified date and transfers the property absolutely to the mortgagee (subject to re-transfer on repayment); (5) Mortgage by Deposit of Title Deeds (Section 58(f)) — the equitable mortgage — created by merely depositing title deeds with intent to create security; requires no registration but a memorandum of deposit is needed; and (6) Anomalous Mortgage — any other form.

The Right of Redemption is the mortgagor's most important right — the right to redeem the mortgage by paying off the debt at any time before the court decrees a sale (Section 60 TPA). Section 60 provides that at any time after the principal money has become due, the mortgagor has a right on payment or tender of mortgage money to require the mortgagee to deliver documents of title. Any clause in the mortgage deed purporting to restrict or clog this right of redemption is void — 'once a mortgage, always a mortgage.'

For advocates, mortgage disputes involve: (1) enforcement — whether the mortgagee can sell without court order (English mortgage power of sale under Section 69, SARFAESI Act enforcement for banks); (2) redemption suits — where the mortgagor seeks to redeem after default; (3) priority — where multiple mortgagees claim priority over the same property; and (4) equitable mortgage formalities — whether a valid equitable mortgage was created by deposit of title deeds with the requisite intent.