JUDICIAL STUDY ON ENGLISH MORTGAGE

5.6 PROPERTY LAW

Submitted by

Vitthal Dixit

SM0119056

3RD YEAR & 5th SEMESTER

Faculty in Charge

Dr. Kasturi Gakul

NATIONAL LAW UNIVERSITY AND JUDICIAL ACADEMY, ASSAM

GUWAHATI

15th November, 2021

 CONTENTS
TABLE OF STATUTES ...................................................................................................................... iii
TABLE OF ABBREVIATION ............................................................................................................ iii
ABSTRACT ........................................................................................................................................... 1
INTRODUCTION ................................................................................................................................. 1
RESEARCH PROBLEM .................................................................................................................. 2
LITERATURE REVIEW.................................................................................................................. 2
SCOPE AND OBJECTIVE ............................................................................................................... 3
ENGLISH MORTGAGE-CHARACTERISTICS................................................................................ 4
ESSENTIALS OF AN ENGLISH MORTGAGE ............................................................................. 4
SALE WITHOUT THE INTERVANTION OF COURT................................................................. 6
RELEVANCE OF ENGLISH MORTGAGE IN INDIA ..................................................................... 8
THE SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND
ENFORCEMENT OF SECURITY INTEREST ACT, 2002 ............................................................ 8
ENGLISH MORTGAGE – COMPARISION AND DRAWBACKS ................................................. 10
DIFFERENCE BETWEEN ENGLISH MORTGAGE AND SIMPLE MORTGAGE ................. 10
DIFFERENCE BETWEEN ENGLISH MORTGAGE AND USUFRUCTUARY MORTGAGE 10
DIFFERENCE BETWEEN ENGLISH MORTGAGE AND MORTGAGE BY CONDITIONAL
SALE ................................................................................................................................................ 10
DRAWBACKS OF ENGLISH MORTGAGE ................................................................................ 11
JUDICIAL PRECEDENTS ON ENGLISH MORTGAGE ............................................................... 12
CONCLUSION.................................................................................................................................... 17
ARTICLES AND BOOKS............................................................................................................ iv
MULLA, D. F. Mulla on Transfer of Property Act (IV of 1882) ................................................... iv
RAO, Y. S. Deed of Mortgage ....................................................................................................... iv
Ratanlal & Dhirajlal. Textbook on Transfer of Property Act ........................................................ iv
SINHA, R. Law of Transfer of Property ........................................................................................ iv
WEBSITES ................................................................................................................................... iv
INDIA, L. Tautological Aspect of English Mortgage In India ...................................................... iv
JAIN, B. What is English Mortgage in India? | Housing News ..................................................... iv
KAPOOR, S. All you need to know about English Mortgage ........................................................ iv

i|P age
 INDEX OF AUTHORITIES
TABLE OF CASES
Sl. No. NAME CITATIONS
Bengal National Bank v. Janaki Nath Roy
1. (1927) 54 Cal. 813
Falakrishana Pal v. Jagannath Marwari
2. AIR 1932 Cal. 775
Falakrishna Pal v. Jagannath
3. (1932) 59 Cal. 1314
Janopakara Saswatha Nidhi Ltd. v. Kuddus
4. AIR 1977 SC 774.
Sahi
Kreglinger v. New Patagonia Meat etc. Co.
5. (1914) A.C. 25
L.V. Apte v. R.G.N. Price
6. AIR 1962 AP 274
Mardia Chemicals Ltd v Union of India
7. [2004] 51 SCL 513 (SC)
Narandas v. S.A. Kamptam
8. AIR 1926 Mad 841
Narayana v. Venkataraman
9. (1902) 25 Mad. 220
RamKinkar v. Satyacharan
10. AIR 1939 PC 14
Thethalan v. The Eralpad Raja
11. (1917) 40 Mad. 1111
Vithal Narayan v. Shriram Savant
12. (1905) 29 Bom. 391

ii | P a g e
 TABLE OF STATUTES

The Transfer of Property Act, 1882

The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002
TABLE OF ABBREVIATION

1. A.C. Appeal Cases

2. A.I.R All India Reporter

3. AP Andhra Pradesh

4. Bom. Bomb

5. Cal. Calcutta

6. Mad. Madras

7. PC Privy Council

8. SC Supreme Court

9. SCC Supreme Court Cases

10. SCL Sebi and Corporate laws

11. Sec. Section

12. v. Versus

iii | P a g e
 ABSTRACT
The paper would focus on the various essentials of an English mortgage. The origin of English
mortgage shall also be studied. The relevance of it in the present time is also analysed by this
paper. The paper attempts to draw a nexus between the various other forms of mortgage with the
English mortgage. Finally, it also attempts at studying the drawbacks that the English System of
mortgage has. In a nutshell, the paper would analyse the structure of an English mortgage while
also looking at its relevance in the present time.

INTRODUCTION
Loans are a common way of acquiring credit for any purpose. Such loans may be given either by
a private person air any other financial agency, such as a bank. Loans may either be secured or
unsecured. Where a loan is given purely on the basis of personal trust and without any securities,
such a loan is termed as unsecured loan. On the other hand, loans which are given, upon taking
securities from the debtor, are known as secured loans. Loans that are secured against movable
property are known as pledge and those secured against immovable property is known as
mortgage. Thus a loan acquired by a person by securing his immovable property is said to have
taken the loan by mortgaging his property.
Mortgage is defined under Section 58 of the Transfer of Property Act, 1882. Clause (a) of
Section 58 defines mortgage as, “A mortgage is the transfer of an interest in specific immoveable
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. The 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 mortgage-
money, and the instrument (if any) by which the transfer is effected is called a mortgage-deed.”1
Thus, from the definition it can be inferred that, a mortgage, as defined in this proviso, is a
transfer of an interest and not an absolute transfer of the property. And also the property, whose
interest is being transferred, is an immovable property. And the reason for such a transfer should
be either to secure payment of debt or, performance of an engagement which may give rise to
pecuniary liabilities.

1
Sec 58(a), Transfer of Property Act, 1882.

1
Mortgage, according to the Transfer of Property Act of 1882, has been classified into six
different types. English Mortgage 2 is one such type of mortgage. In this paper we will be
discussing about the various characteristics of the English Mortgage, its relevance in the present
time and also the form in which English Mortgage is being applied in India. Furthermore, a
distinction between the English and other forms of Mortgage, particularly Mortgage by
Conditional Sale, would also be looked into.

RESEARCH PROBLEM

1. What are the characteristics of an English Mortgage?

2. What is the relevance of the English Mortgage in India, at present?

LITERATURE REVIEW

Sinha, 20193
The twentieth edition of the book by R K Sinha is a masterpiece in understanding the law
relating to Transfer of property. The book explains all the provisions relating to transfer of
property in a lucid and comprehensive manner. Provisions relating to Mortgage and its types
have been explained in great details. All the important cases relating to the provisions have been
discussed in details. The explanations are not limited only to the simplification of the bare
provision, but also its application and relevance in the present time. All in all, it is an asset for
any law student who wishes to pioneer the basics of the laws relating to transfer of property.
Mulla, 19854
Mulla’s book on the Transfer of Property is an all time classic and is the most detailed book one
can find for laws relating to the laws of transfer of property. This book is useful not only for
students but also to academicians, professionals and research. Though the book is bulky and
voluminous, yet it is quiet convenient to search through topics. The book has an elaborate
portion dedicated to the explanation of English mortgage. The law in India is not merely what is
written in a statute, but is also made by Judges through its numerous judgments. As such
studying these cases become very important to understand the real application of the provisions.

2
Sec 58(e), Transfer of Property Act, 1882.
3
Mulla, D. F. MULLA ON TRANSFER OF PROPERTY ACT (IV OF 1882), 5th Edition, 1985, N. M. Tripathi Pvt. Ltd.
4
Sinha, R. LAW OF TRANSFER OF PROPERTY, 20th Edition, 2019, Central Law Agency.

2
As such, the book has a plethora of cases that helps in understanding the topic. This is, therefore,
one of the most detailed book in the subject and has helped me in the preparation of this paper.

SCOPE AND OBJECTIVE

SCOPE
The scope of this paper is limited only to the study of the characteristics of English Mortgage
and its use in the Indian system.
OBJECTIVE
 To study the characteristics of English Mortgage.
 To study the relevance of the English mortgage in the Indian legal system.
 To study the difference between English mortgage and mortgage by conditional sale.
RESEARCH METHODOLOGY
1. Approach to Research: In this task doctrinal research was included. Doctrinal Research is an
exploration in which optional sources are utilized and materials are gathered from libraries,
files, and so on. Books, diaries, articles were utilized while making this task.
2. Types of Research: Explanatory type of research was utilized in this task, in light of the fact
that the venture point was not moderately new and incomprehensible and furthermore on the
grounds that different ideas were should have been clarified. Field Research was not
conducted.
3. Sources of Data collection: In this paper secondary Data were used. Secondary data refers to
those data which are already stored in the form of books, documents, diaries or any other
text. No surveys or case study were conducted.

3
 CHAPTER 1

ENGLISH MORTGAGE-CHARACTERISTICS
English mortgage, as the name suggests, has been adopted from the British system of mortgage.
In Britain, the system of mortgage is different from that in India. For instance, in India there is
transfer of an interest in the property i.e. a limited interest, however, in England there is absolute
transfer of interest. Clause (e) of Section 58 of the Transfer of Property Act, 1882 defines
English Mortgage as, “Where the mortgagor binds himself to repay the mortgage-money on a
certain date, and transfers the mortgaged property absolutely to the mortgagee, but subject to a
proviso that he will re-transfer it to the mortgagor upon payment of the mortgage-money as
agreed, the transaction is called an English mortgage.”
In English mortgage there is an absolute transfer of property to mortgagee with a condition that
when the debt is paid off on a certain date, he (mortgagee) shall re-transfer the property to
mortgagor.5 It can also be said to be a transfer of ownership, whereby, there is a covenant to
repay the debt within a stipulated time and with a proviso that once such condition is fulfilled the
property would return back to the mortgagor. In Narayana v. Venkataraman6 the Madras High
Court held that “The three essentials of an English mortgage are (1) that the mortgagor should
bind himself to repay the mortgage money on a certain day, (2) that the property mortgaged
should be transferred absolutely to the mortgagee, (3) that such absolute transfer should be made
subject to a proviso that the mortgagee will re-convey the property to the mortgagor, upon
payment by him of the mortgage money, on the day on which the mortgagor bound himself to
repay the same."

ESSENTIALS OF AN ENGLISH MORTGAGE

There are three essential elements under English Mortgage. They are explained as under:
1. The mortgager binds himself to repay the mortgaged money on a certain date: An essential
element of English mortgage is that the mortgager assigns a date by which he shall repay the
loan. Such date has to be clearly mentioned in an English mortgage deed. This can be
regarded as a feature which is distinct from a simple mortgage. The fulfillment of the

5
RK Sinha, LAW OF TRANSFER OF PROPERTY (Central Book Agency 20) (2019).
6
Narayana v. Venkataraman, (1902) 25 Mad. 220.

4
 condition that the mortgagee shall re-transfer the property to the mortgagor solely depends on
the repayment before the due date.
2. The mortgage-property is transferred absolutely to the mortgagee: The mortgagor binds
himself to repay the loan by absolutely transferring the property. The use of the word
“absolutely” creates confusion, as, under the Indian law mortgage is just the transfer of
interest and not the transfer of the absolute property. Thus it is observed that the definition of
English Mortgage should be read in conjunction with Section 58(a) of the Act. Hence it is
held that, an English Mortgage in India can hardly be regarded as the transfer of the entire
estate of mortgagor to the mortgagee. 7 In RamKinkar v. Satyacharan8 , the Privy Council
observed that, “Section 58(e) deals with form, not substance. The substantial rights are dealt
with in Section 58(e) and 60. Whatever form is used, nothing more than an interest is
transferred and that interest is subject to the right of redemption.”
3. The absolute transfer is subject to a proviso that on payment of the debt, on or before the
specified date, the property would be re-transferred to the mortgagor: The property that is
being mortgaged is not the property of the mortgagee forever. It has to be returned back to
the mortgagor on payment of the debt within the stipulated time period. As such, it can be
said that even though the word “absolutely” is being used, it only refers to an interest in the
property because during this period, and even after the expiration of the specified period, the
right of redemption of the mortgagee is upheld and the mortgagor does not have the power to
alienate the property or sale it even after the expiration of the specified period except under
certain conditions specified in Section 69 of the Act. If the mortgagor fails to repay the debts
within the stipulated time, the property can be sold subject to the provisions under Section 67
of the Act. However, he cannot on his own sale the property unless the criteria under Section
69 are fulfilled.
"In consideration of the sum of Rs. 7,000 paid to the mortgagors by the mortgagee they, the
mortgagors, do hereby covenant with the mortgagee that they will pay to the mortgagee the sum
of Rs. 7,000 on the 3 1st December 1882 and will pay interest for the same in the meantime and
until final payment of all moneys due herein under at the rate of 10 per cent per annum. In
consideration of the premises the mortgagors hereby mortgage and assign to the mortgagee the

7
Falakrishana Pal v. Jagannath Marwari, AIR 1932 Cal. 775.
8
RamKinkar v. Satyacharan , AIR 1939 PC 14.

5
coffee estates. Upon repayment to the mortgagee of all sums due to him by the mortgagors, the
mortgagee shall re-convey the said property" It was held not to be an English mortgage (1)
because it was doubtful if the words "mortgage and assign" amounted to an absolute transfer, and
(2) because the proviso for re-conveyance was not on payment on a fixed date. 9

SALE WITHOUT THE INTERVANTION OF COURT

One of the most unique feature of an English Mortgage in that it is an absolute transfer of
property. This means ownership rights are vested upon the mortgagee. Under such a scenario, it
seems, a sale, be it public or private, is possible without the intervention of the Court. The right
under Section 69 of the Transfer of Property Act, 1882, is as much and as full a right as the right
of redemption of the mortgagor. The mortgagee is, in no sense, a trustee for the mortgagor in the
matter of the power of sale; as he holds it for protection of his interest and for his benefit. The
mortgagee is not debarred from exercising the power of sale, even though the mortgagor files a
suit for redemption. So long as the mortgage money is not paid or validly tendered, the
mortgagee with full knowledge of a pending suit for redemption and even to defeat the suit can
enforce his power of sale under this Section. 10 However, such a power is not absolute and is
subject to the conditions as has been listed under Section 69 of the Act. Section 69 of the
Transfer of Property Act 1882, lays down the following conditions:
When the mortgage is an English mortgage and none of the parties are Hindu, Muslim or
Buddhist or any other tribe, sect, etc., specified by the Government from time to time. In L.V.
Apte v. R.G.N. Price,11 the Andhra Pradesh High Court applied Section 69 of the Transfer of
Property Act, 1882, to an English mortgage between a company and trustees for debenture-
holders, some of the trustees being Hindus.
When the mortgage-deed expressly provides that the mortgagee is entitled to sell the mortgaged
property, or any part thereof, in default of payment of the mortgage-money, without the
intervention of the court and when the mortgagee is the Government.

9
supra.
10
Tautological Aspect of English Mortgage in India Legalserviceindia.com,
http://www.legalserviceindia.com/articles/tauvs.htm#:~:text=The%20Transfer%20of%20Property%20Act%20defin
es%20an%20English%20mortgage,payment%20of%20the%20mortgage%20money. (last visited Dec 4, 2020)
11
L.V. Apte v. R.G.N. Price, AIR 1962 AP 274.

6
If the mortgaged property or any part thereof is, on the date of execution of the mortgage deed,
situate within the towns of Calcutta, Madras, Bombay or in any other town or area which the
State Government may, by notification in the Official Gazette, specify in this behalf.
However sub section 2 of Section 69 puts a restrain on this right of the mortgagee. It requires
that the mortgagor should be given a three months notice to repay the debt and till that time the
right of redemption is valid. In the case of interest, if the interest amounting to at least Rs.500/-
remains unpaid for three months after becoming due, similar notice must be given before the
mortgagee wants to invoke the above provision of law. The power of sale can only be exercised
when there is a default in payment. However, the mortgagee cannot buy the property for himself
and also cannot make a transaction that would hamper the interest of the mortgagor, because
after all it is actually the property of the mortgagor. It has been held in Purasawalkam Hindu
Janopakara Saswatha Nidhi Ltd. v. Kuddus Sahib12, that where the amount due for principal is
not repayable at any particular date, nor is anything stated as to when it is to be repaid, there can
be no default in the payment of the principal sum due until there is a demand made for the
money.
The right of redemption of the mortgagor is not extinguished merely by a notification of sale or
a contract of sale. It is extinguished only after the completion of the sale. In Narandas v. S.A.
Kamptam13, the Supreme Court held that, merely putting the property to auction does not destroy
the mortgagor’s right of redemption.

12
Janopakara Saswatha Nidhi Ltd. v. Kuddus Sahib, AIR 1926 Mad 841.
13
Narandas v. S.A. Kamptam, AIR 1977 SC 774.

7
 CHAPTER 2

RELEVANCE OF ENGLISH MORTGAGE IN INDIA

While answering the relevance of English Mortgage in India, their Lordships while referring to
the cases of Vithal Narayan v. Shriram Savant 14 ; Thethalan v. The Eralpad Raja 15 ; Bengal
National Bank v. Janaki Nath Roy 16 and Falakrishna Pal v. Jagannath 17 held that, since the
passing of the Transfer of Property Act the distinction drawn in England between law and equity
in such cases did not exist in India. However, while answer the position of the mortgagor in
India, it was observed that, “The Indian mortgagor, however, retains some rights, though the
English rules of equity do not apply. He retains a right to a re-conveyance of the land and a right
to transfer such right by way of sale or second mortgage, and this right in India is a legal right.”
It is therefore clear that, since the right of the mortgagor is a legal right, its retention will prevent
the transfer of absolute interest of the mortgagor, in the property, to the mortgagee. It can
therefore be inferred that, under the Indian system of English mortgage, there exists no equitable
right or equitable interest and the right of the mortgagor is a legal right.
In Kreglinger v. New Patagonia Meat etc. Co.,18 while referring to Section 58(e), their Lordships
observed that, “ln using those words does it mean that no interest or no legal interest in the
property remains in the mortgagor? Their Lordships cannot think so. If the sub-section stopped at
the word “mortgagee” it might be necessary to put this construction upon it, but it does not stop
there; it adds the proviso that the mortgagee “will retransfer” the property “upon payment of the
mortgage money as agreed”. Their Lordships think that with this addition the sub-section upon
its true construction does not declare “an English mortgage” to be an absolute transfer of the
property. It declares only that such a mortgage would be absolute were it not for the proviso for
retransfer.19

THE SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND

ENFORCEMENT OF SECURITY INTEREST ACT, 2002
14
Vithal Narayan v. Shriram Savant, (1905) 29 Bom. 391.
15
Thethalan v. The Eralpad Raja, (1917) 40 Mad. 1111.
16
Bengal National Bank v. Janaki Nath Roy, (1927) 54 Cal. 813.
17
Falakrishna Pal v. Jagannath, (1932) 59 Cal. 1314.
18
Kreglinger v. New Patagonia Meat etc. Co, (1914) A.C. 25.
19
Dinshah Fardunji Mulla, MULLA ON TRANSFER OF PROPERTY ACT (IV OF 1882) (Law Pub. Co.) (1987).

8
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002, herein after referred to as Securitisation Act, has been enacted recently to confer
powers on banks and other financial institutions. English system in its true sense has, for the first
time, being applied to the Indian mortgages, though with subtle changes. This act provides the
financial institutions to sale of the securities, in case of secured creditor, without the intervention
of the Court. However certain conditions are to be fulfilled. In fact, Section 13(1) of the
Securitisation Act has an overriding effect over Section 69 of the Transfer of Property Act, 1882.
This Section is applicable to all class of people not specifically excluded by the act or any other
act governing the people of India.
The provisions of the Act have been made applicable exclusively to banks and financial
institutions as secured creditors to enforce their security interest with a view to recovering their
debts. That is, if the banks and financial institutions are secured creditors having lent against
securities like mortgage of immovable property, charge, hypothecation they can take over and
sell such securities after giving 60 days’ notice to the borrowers so as to adjust the loan, without
resort to litigation in a competent court of law. The provisions of the Act cannot be considered to
have been extended to the secured creditors in general. In a nutshell, the provisions of Section 69
of the Transfer of Property Act, 1882 can be ignored by the banks and financial institutions in the
matter of recovery of their debts ex curia whereas other creditors have to file a suit in a
competent court for recovery of the loan.20
In Mardia Chemicals Ltd v Union of India, 21 the Supreme Court attempted to distinguish
between an equitable (referred to in India as an English mortgage) and legal mortgage and it has
been submitted that English mortgage is in fact transfer of the property absolutely to the
mortgagee with a term of retransfer. The Court observed that, “Section 69 of the Transfer of
Property Act 1882 provides that, in the case of an English mortgage, the mortgagee shall have
the power to sell the mortgaged property in default in payment of the mortgage money without
the intervention of the court.”

20
Ibid 10.
21
Mardia Chemicals Ltd v Union of India, [2004] 51 SCL 513 (SC).

9
 CHAPTER 3

ENGLISH MORTGAGE – COMPARISION AND DRAWBACKS

DIFFERENCE BETWEEN ENGLISH MORTGAGE AND SIMPLE MORTGAGE

1. In English Mortgage, the property is transferred absolutely to the mortgagee but in Simple
Mortgage, only the right of sale is transferred.
2. In English mortgage, the mortgagee has the right to enter intoimmediate possession of the
mortgaged property whereas in simple mortgage such a right is not present

DIFFERENCE BETWEEN ENGLISH MORTGAGE AND USUFRUCTUARY

MORTGAGE

1. In English mortgage, there is a personal liability to repay the loan whereas in usufructuary
mortgage such liabilities are not present.
2. In English mortgage, the property is absolutely transferred to the mortgagee, on condition
that the property will be re-transferred to the mortgagor on his repayment of loan while in
case of usufructuary mortgage the mortgagee does not get the ownership of the property
only possession is transferred to him which he can retain till his debt is paid off. 22

DIFFERENCE BETWEEN ENGLISH MORTGAGE AND MORTGAGE BY

CONDITIONAL SALE

Both, English Mortgagee and mortgage by Conditional sale are similar because of the fact that in
both forms there is provision for transfer of ownership to the mortgagor in default of non-
payment of debt. Under both the transactions, it is not necessary for the mortgagor to hand over
the possession of the property to the mortgagee. However, there are some differences in both
these systems of mortgage.
1. One of the characteristics of English mortgage is that it binds the mortgagor personally for
the repayment of the debt. Whereas, on the other hand, in mortgage by conditional transfer

22
Dhirajlal, TEXTBOOK ON TRANSFER OF PROPERTY ACT (LexisNexis 6) (2020).

10
 the mortgagor does not necessarily binds himself personally to the debt and has his remedy
only against the mortgage-property.
2. In English mortgage there is absolute transfer of property and such property can be redeemed
back only after the payment of the debts before the due date. The ownership is vested upon
the mortgagee immediately on the commencement of the mortgage. However, in case of
mortgage by conditional sale, there is transfer of qualified or conditional ownership which
subsequently becomes absolute on the non-payment of debts. This means that unlike English
mortgage, ownership is vested only after the mortgagor defaults his payment of the mortgage
amount.
3. Another major difference between English Mortgage and mortgage by conditional sale is
that, the former is subject to stump duty and registration charges at the time of taking the loan
and at the time of repaying the amount whereas in the latter’s case stump duty and
registration costs may not be necessary.

DRAWBACKS OF ENGLISH MORTGAGE

Perhaps the biggest drawback of an English mortgage is the cost involved in the process. As
compared to all the other types of mortgages, the costs involved in an English mortgage are
higher. Moreover, due to the fact that the property is first transferred in the name of the lender,
and then later on, in the name of the borrower; the stamp duty and registration charges are also to
be paid twice. This eventually increases the borrowing cost for the mortgagor.
Under an English mortgage, the Act allows the lender to sell the mortgaged property, without the
intervention of court, if the power to sell is expressly embodied in the mortgage deed, which is
generally beneficial to a mortgagee in commercial/ financial transactions. This advantage,
therefore, makes English mortgage popular among the companies and government bodies in
providing loans/working capital against immovable properties as collaterals. However, this
privilege of the mortgagee to sell the property without the intervention of court comes with
certain mandatory stipulations to be fulfilled rigorously by a mortgagee prior to the sale. Another
drawback of an English mortgage is that it is applicable and confined to a select set of
mortgagors and mortgagees in India.

11
 JUDICIAL PRECEDENTS ON ENGLISH MORTGAGE
1. Union Of India, (Through) ... v. Kunwar Vilas Nath
Bench: Dr. Shalini Phansalkar-Joshi Dixit Decided in 2018 by Bombay HC

Here in the case, A specific question of law was raised in the backdrop of the facts of this case as
to 'whether the 'Mortgage Deed' could be treated to be a part and parcel of the Conveyance
Deed of the same date? An intriguing question of law was also posed as to 'whether
the Government Grants Act, 1895, which is finding mention in the 'Deed of Conveyance', was
applicable only to that document or also to the 'Mortgage Deed'?' It was also necessary to be
decided 'whether the document executed as a 'Deed of English Mortgage' was subject to
redemption and, if yes, whether the Suit filed was within the prescribed period of limitation?' All
these contentions were raised before the Trial Court and also before the Appellate Court.

As held by the Apex Court in the case of Santosh Hazari Vs. Purushottam Tiwari, the
jurisdiction of the Second Appeal is now ceased to be available to correct the errors of law or
erroneous findings of the first Appellate Court, even on the question of law, unless such question
of law is a substantial one. Therefore, unless there is a finding on question of law, also arrived at
by the first Appellate Court, this Court cannot decide whether this Second Appeal involves
substantial question of law or not. Whatever substantial questions of law, which are framed by
this Court at the time of admission of the Second Appeal, they are all having roots in the
pleadings and evidence of the parties, as they pertain to the interpretation of the documents;
whether 'Mortgage Deed' can be considered as part and parcel of the 'Conveyance Deed'?;
whether the documents executed between the parties demonstrate that what was executed was a
'Deed of English Mortgage', subject to redemption? Most importantly, even the issue of
limitation being also a mixed issue of facts and law, as regards these issues or the questions,
there has to be the Judgment of the first Appellate Court concluding the findings thereon
supported with reasons therefor.

Here the Appellate Court has not given its own reasons. There is also no independent
appreciation of evidence in its Judgment. There is no finding supported with reasons as to
whether the 'Mortgage Deed' could be treated as part and parcel of the 'Conveyance Deed' and
whether the document executed was a 'Deed of English Mortgage'. There is also no reasoning as

12
to whether the Government Grants Act,23 1895, can be made applicable only to the 'Deed of
Conveyance' and not to the 'Deed of Mortgage'. There is also no reasoning as to which
provisions, whether of Government Grants Act, 1895, or TPA, 1882, will prevail.

2. Raj Kishore(Dead)By Lrs v. Prem Singh And Ors24 (2011) 1 SCC 657

Bench: J. Markandey Katju, J. T.S. Thakur Decided in 2010 By S.C.

The transaction in question was in the nature of an English Mortgage as defined under Section
58(e) of the Transfer of Property Act, 1882.

It is only in cases where all the three requirements indicated above are satisfied that the
transaction constitutes an English mortgage and not otherwise. The case at hand does not satisfy
all the three requirements mentioned above. In particular the first requirement where under the
Mortgagor binds himself to re-pay the mortgage money on a certain date is not satisfied in the
instant case. We say so because the sale-deed executed by the plaintiffs-appellants does not
contain any such stipulation binding the seller to pay the amount of Rs.6,000/- on a certain date.
As a matter of fact, the sale-deed does not even remotely suggest that the transaction is in the
nature of a mortgage or that there is any understanding or agreement between the parties
whereunder the property sold has to be re-transferred to the seller. The only other document
which could possibly contain such a stipulation binding the Mortgagor to return
the mortgage money is the agreement for re-conveyance. Significantly, this document is signed
only by Prem Singh the purchaser and not by the seller. The document signed by Prem Singh is
described as an agreement for re-conveyance. There is no doubt a stipulation that Prem Singh has
agreed to re-transfer the property to the seller in case the plaintiff Raj Kishore returns the sum of
Rs.6,000/- by 6th July, 1981 yet there is nothing in the document to suggest that the seller had
bound himself to abide by that stipulation. What is important in terms of the requirement
of Section 58 (e) is not that the purchaser has agreed or bound himself to transfer the property by
a particular date but that seller has bound himself to pay the amount by a certain date. Since the
seller is not a signatory to the agreement of re- conveyance it is difficult to see how he can be
said to have bound himself to re-pay the mortgage money by the 6th July, 1981. We have,

23
Government Grants Act
24
(2011) 1 SCC 657

13
therefore, no difficulty in rejecting the contention urged on behalf of the appellants that the
transaction was in the nature of an English Mortgage and the suit was in essence a suit for
redemption of such a mortgage. 25 We have also in that view no difficulty in repelling the
contention urged by appellant that the stipulation of a date for payment of money as a condition
for re-conveyance of the property is a clog on equity of redemption. We cannot overlook the fact
that the suit filed by the appellants did not proceed on the basis that the transaction between the
parties tantamounted to a mortgage nor did the plaintiff pray for a decree for redemption from
the Court. The suit was, as noticed earlier, one for declaration to the effect that the sale-deed
executed by him was void and the plaintiffs continued to be owner and in occupation. The
contention that the transaction between the parties was in reality one in the nature of
a mortgage or that the suit was in substance one for redemption has not, therefore, impressed us
and is accordingly rejected.

3. Sanjeev Narula v. Tata Capital Financial Services26 C.M. APPL.5425/2017

Bench-:J. S. Ravindra Bhat & J. Yogesh Khanna Decided in 2017 by Delhi HC

The transaction in this case, was in reality by way of English mortgage. The said provision
reads as follows:

The court now deals with the appellants' contention with respect to the transaction being either
a mortgage by conditional sale or a sale with a condition of repurchase, or its being
an English mortgage, with the further contention that the right to redeem was not extinguished.
The guiding principles on this aspect are embodied in clause (c) of section 58 of the Transfer of
Property Act, 1886 which defines "Mortgage by conditional sale"

Therefore, whether a transaction amounts to a mortgage by conditional sale or a sale with an

option of repurchase has to be determined in the light of the ingredients of the contended
document, read in the light of section 58(c) of the TP Act, as interpreted in the various
precedents as demonstrated above. In the present case, as noticed earlier, the deed was not an
"ostensible sale": the first ingredient necessary to attract Section 58 (c). It merely recognized a

25
The Government Grants Act, 1895 (indiankanoon.org)
26
C.M. APPL.5425/2017

14
pre-existing creditor debtor relationship and reiterated the equitable mortgage created earlier;
the terms of the consent award then conferred an option upon the creditor, Tata Capital, to treat
the instrument as a conveyance in the event of default in re-payment. Thus, the instrument was
never a sale, to begin with; it became a sale deed, by default, as it were, upon the default of the
debtor/Sanjeev Narula. So far as English mortgage goes, the terms of Section 58 (e) 27 are
categorical; the mortgagor should "bind" himself to pay the amount by a certain date and transfer
the property absolutely. Here, the question of transfer "absolutely" never happened. It was
contingent upon the happening of an event, i.e. the appellants' default.

4. Kotak Mahindra Bank Ltd v. Trupti Sanjay Mehta And 8

Ors28 Writ Petition No. 722 of
2015

Bench: V.M. Kanade Decided in 2015 by Bombay H.C.

It is clear that mortgaged property cannot be sold without intervention of the court except in
three conditions as enumerated in clauses (a), (b) and

(c) of sub-section (1) of Section 69. Clause (a) relates to English mortgage in which a mortgaged
property is permitted to be sold without intervention of the court but in the stricto sensu cl. (a)
would not be applicable to the present case as it contains many conditions which obviously are
not fulfilled in case in hand. It is however, submitted that the provision for enforcing secured
debt was made on the lines of the principle governing English mortgage. It is perhaps sought to
be canvassed that if that kind of step namely enforcing the secured debt without intervention of
the court is permissible in a case of English mortgage such a provision may legitimately be
enacted in respect of mortgages like English mortgages. We find much has been argued on the
point as to whether the transactions involved in the cases before us amount
to English mortgage or not though none of agreements have been placed before us. Distinction
between the two have also been tried to be shown and it has been submitted
that English mortgage is in fact transfer of the property absolutely to the mortgagee with a term
of retransfer. Section 58(e) pertaining to English mortgage

27
Section 58
28
Writ Petition No. 722 of 2015

15
It is submitted that by no means it can be said that the transactions in question are like those
as English mortgage. On the basis of the above provision it is further submitted that if the
condition of retransfer is not invoked the mortgagee is possessed of all rights absolutely in the
property. There are different kinds of mortgages as enumerated in section 58 of the Transfer of
Property Act. We feel that it would not be necessary to further go into the matter as to whether
the agreements in the cases before us amount to English mortgage or not since the non-obstante
clause under Section 13(1) of the Act provides that notwithstanding anything contained
in Section 69 a secured interest can be enforced without intervention of the court. That is to say it
overrides the provision as contained under Section 69 where it is said that in no cases, other than
those as enumerated in clauses (a), (b) and (c), a mortgage shall be enforced without intervention
of the court. Once the said condition, as noted above, in section 69 of the Transfer of Property
Act, the general law on the subject, has been overridden by the special enactment namely the
Securitisation Act, it would not make much of a difference as to whether the transactions in
question are akin to or amount to English mortgage or not, since irrespective of the kind of
the mortgage the secured interest is liable to be enforced without intervention of the court as per
the provision contained under Section 13 of the Act. Needless to refer Section 35 of the Act,

16
 CONCLUSION
English mortgage is not a simple mortgage. It is the transfer of absolute interest in the property,
with a right to redemption of the mortgagor by paying off the debts within a stipulated period of
time. However the form in which it is adopted in India is quite different from how it operates in
England, the place where it originated. In India, though the word absolute is being used yet, it
only refers to the transfer of limited interest as the absolute transfer of a property in mortgage is a
concept alien to the Indian law(s) relating to transfer of property. This has also been upheld in a
number of cases.
Furthermore, the conditions which give mortgagee the right to sale the mortgage-property
without the intervention of the Court have also been discussed. Also the changes that have come
about after the passing of the Securitisation Act, 2002 have also been discussed in this paper.
From the paper it can be concluded that, in India, English Mortgage is of no relevance at present
as it is violative of the basic fundamental rights of the citizens as provided in the case of section
69 of the Transfer of Property Act, 1882. Thus, it has become redundant and is not more in use
now days.

17
 BIBLIOGRAPHY
ARTICLES AND BOOKS

MULLA, D. F. Mulla on Transfer of Property Act (IV of 1882)

RAO, Y. S. Deed of Mortgage

Ratanlal & Dhirajlal. Textbook on Transfer of Property Act

SINHA, R. Law of Transfer of Property

WEBSITES

INDIA, L. Tautological Aspect of English Mortgage In India

JAIN, B. What is English Mortgage in India? | Housing News

KAPOOR, S. All you need to know about English Mortgage

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