CIA-3

RIGHTS AND LIABILITIES OF MORTGAGEE

By:
Nikitha Prasad -1650257
Sharada B.N. -1650264
Mehul Shandilya -1650217
RIGHT TO FORECLOSURE OR SALE
 Section 67
According to this section, at any time after the mortgage-money has become due and before a decree
has been made for the redemption of the mortgaged property, or the mortgage-money has been paid
or deposited the mortgagee has a right to obtain from the Court a decree that the mortgagor shall be
absolutely debarred of his right to redeem the property, or a decree that the property be sold.
A suit to obtain a decree that a mortgagor shall be absolutely debarred of his right to redeem the
mortgaged property is called a suit for foreclosure.
1) When the time fixed for repayment of mortgage money has expired and the mortgagor’s right to
redeem the mortgaged money has become complete but he has failed to avail that right, the
mortgagee gets a right to institute a suit. The mortgagee does not automatically become the
owner he has to file a suit for recovery of the amount due within the limitation period of 12
years.
2) Right to redeem and right to foreclose are co-extensive. (In absence of stipulation of time)

Right of Redemption Right to Foreclosure

It is an absolute right. The mortgagor It is not an absolute right but can be made
cannot limit his right of redemption subject to the contract between the parties
to mortgage
 Section 67A
It provides that :
a) A mortgagee who holds 2 or more mortgages executed by the same mortgagor
b) In respect of each mortgagee he has a right to obtain the same kind of decree under section 67
c) He sues to obtain such decree on any one of the mortgages.
d) He shall be bound to sue on all mortgages in respect of which the mortgage money has become
due.

 Distinction between section 61 and 67A

Section 61 Section 67A

A mortgagor executing 2 or more A mortgagee having 2 or more mortgages
mortgages in favour of the same executed by the same mortgager has to
mortgagee is entitled to redeem each bring one suit to enforce all the mortgages
mortgage separately. and not only to enforce one of them.
RIGHT TO SUE FOR MORTGAGE MONEY

 Section 68
1) In the following four cases the mortgagee has a right to sue for the mortgage money:
a) Where the mortgagor binds himself to repay the same
b) Where the mortgaged property is destroyed, wholly or partially without the fault of any
other party
c) Where the mortgagee is deprived of the whole or part of his security by wrongful act or
default of the mortgagor
d) Where the mortgagee being entitled to possession, the mortgagor fails to deliver the
same.
2) Stay of suit
 Where the mortgagor is not in default [clauses (a) & (b) ] the suit in this section shall be
stayed until the mortgagee has exhausted his remedy against the security.
 Such restriction is not imposed under clauses (c) & (d).
RIGHT TO SELL
 Section 69
1) The mortgagee has a right to sell in case of default of mortgaged-money without the
intervention of the court in the following cases:
a) Where the mortgage is an English mortgage and neither the neither the mortgagor not the
mortgagee is a Hindu, Muhammadan, Buddhist or a member of any other race, sect, tribe
or class from time to time specified in this behalf by the State Government in the official
gazette.
b) Where a power of sale without the intervention of the court is expressly conferred on the
mortgagee by the mortgage deed and the mortgagee is the government.
c) Where a power of sale without the intervention of the court is expressly conferred on the
mortgagee and the mortgaged property is situated within the specified towns.
2) Who may exercise power
It includes sale by an agent of the mortgagee including his assignees or transferees.
In Hind v. Poole it was held that the power of sale given to two joint mortgagees may be
exercised by survivor of them.
3) Mortgaged property or any part of it may be sold.
4) Conditions for Exercise of Power
a) Notice must have been served in writing and three months must have passed after service of notice.
b) Some interest under the mortgage amounting to at least 500 rupees in arrear and unpaid for 3
months after becoming due.
5) Restraint on Exercise of Power
In Jarup Teja and Co. v. Peerbhoy Adamji it was held that a mortgagor may obtain an injunction to
restrain a sale if the mortgagee is acting in a fraudulent and improper manner.
6) Protection to Purchaser
The title of purchaser is not affected on the ground of any irregularity in the exercise of power of sale.
7) Order of Appropriation of Sale Proceeds
It is going to be utilised for:
c) Discharge of prior encumbrances
d) Payment of costs, charges and expenses property incurred for the sale
e) Discharge for motgage-money
f) The surplus money will be paid to the person entitled to the mortgaged property.
8) Remedy of Mortgagor
If the irregularity has been committed in the exercise of the power of sale, the mortgagor’s only
remedy is damges against the mortgagee, in the absence of fraud.
RIGHT TO APPOINT A RECEIVER

 Section 69A
This section gives the mortgagee a right to appoint a receiver of the income of the mortgaged
property.

1) Method of Appointment and Removal of receiver

2) Position of the receiver
3) Power of receiver
4) Remuneration of receiver
5) Duty of the receiver
6) Application of money received
RIGHT TO ACCESSION

 Section 70
Accession to mortgaged property.—If, after the date of a mortgage, any accession is made to the
mortgaged property, the mortgagee, in the absence of a contract to the contrary, shall, for the
purposes of the security, be entitled to such accession. 
Illustration: A mortgages to B a certain field bordering on a river. The field is increased by alluvion.
For the purposes of his security, B is entitled to the increase.
1) Accessions are additions to the property. An increase or enlargement of estate is also accession.
2) Mortgagee is entitled to treat the acquired accession as a part of security and to enforce lien upon
them
3) In Shyama churn v. Ananda Chandra it was stated that where the mortgagor discharges a prior
encumbrance on the mortgaged property existing at the date of the mortgage the increase in
value of estate will be for the benefit of the mortgagee.

Section 63 Section 70
Mortgagor’s right of accession Mortgegee’s right of accession
RIGHT TO RENEWAL OF MORTGAGED LEASE

 Section 71
Renewal of mortgaged lease.—When the mortgaged property is a lease and the mortgagor
obtains a renewal of the lease, the mortgagee, in the absence of a contract to the contrary,
shall, for the purposes of the security, be entitled to the new lease.
1) It is based on the principle that a renewal of lease is a graft upon old stock and is subject to
same equity as the old lease.
2) In Rakestraw v. Brewer, it was stated that “the new lease is treated as engrafted on the
stock of the old lease and forming part of the mortgaged property

Section 64 Section 71
Mortgager gets benefit of renewed lease Mortgagee gets benefit of renewed lease
RIGHT TO SPEND MONEY

 Section 72
This section provides for the circumstances under which the mortgagee may spend money.
It is based on the principle laid down In the case of Dryden v. Frost according to which the
mortgagee is entitled to be indemnified against all expenses so long as he act reasonably as a
mortgagee and is allowed all proper costs, charges and expenses in relation to the mortgaged
property.
Circumstances in which expenditure is allowed:
1) For the preservation of the mortgaged property from destruction, forfeiture or sale.
2) For supporting the mortgagor’s title to the property
3) For defending his own title against the mortgagor
4) For the renewal of the lease
5) For insuring the property
RIGHT TO PROCEEDS OF REVENUE SALE OR COMPENSATION ON
ACQUISTION

 Section 73
1) According to this section, where the mortgaged property or any interest in it is sold,
2) Owing to failure to pay
 Arrears of revenue, or
 Other charges of a public nature, or
 Rent due in respect of such property
3) Such a failure did not arise from any default of the mortgagee,
4) The mortgagee shall be entitled to claim payment of the mortgage money out of any
surplus of sale proceeds remaining after the payment of-
(a) The arrears and
(b)All charges and deductions directed by law.
RIGHT OF MESNE MORTGAGES

 Section 94
1) Mesne Mortgages- This provision discusses about how a mesne mortgagee has same rights
against the other mortgagees posterior to himself as he has against the mortgagor, in cases of the
concerned property being mortgaged for successive debts to successive mortgagees.
2) A mesne mortgagee can redeem any mortgagor and exercise the right of foreclosure and sale
against the subsequent mortgagees.
3) A mesne mortgagee can also redeem all the mortgages before him and foreclose all the
mortgages after him. Redemption by a mesne mortgagee is upwards (prior) and foreclosure
(downwards) i.e. subsequent.
Section 94 and 91(a) taken together embody the principle “ redeem up and foreclose down”

Illustration
A mortgagor, mortgages his property to A,B and C respectfully for debts. Here c can redeem B or A
and B can redeem A. A can foreclose the mortgagor and B and C in whose hands equity of
redemption has been assigned.
LIABILITIES OF MORTGAGEE IN POSSESSION
Section 76
When during the continuance of the mortgage, the mortgagee takes possession of the
mortgaged property he is bound by the following duties:
a)Duty to manage the property as a person of ordinary prudence.
b)Duty to collect rents and profits of the property to his best endeavour.
(Bansari Prasad v. Ram Narain)
c)Duty to pay Government dues ( public charge, rent and govt. revenue)
d)Duty to make necessary repairs of the mortgaged property
e)Duty not to commit any act which may destroy or injure the property permanently
f)Duty to apply insurance money in reinstating the property or in reduction of the
mortgage-money if he receives such money in respect of the mortgaged property
g)Duty to keep proper accounts of all sums received and spent by him as a mortgagee
(Mohd. Ishaq Khan v. Rup Narain Singh AIR 1931 All 562)
h)Duty to apply rents and profits in discharge of interest after making certain deductions
i)Duty to account for gross receipts.
 Section 77
Receipts in lieu of interest.—Nothing in section 76, clauses (b), (d), (g) and (h), applies to
cases where there is a contract between the mortgagee and the mortgagor that the receipts from
the mortgaged property shall, so long as the mortgagee is in possession of the property, be
taken in lieu of interest on the principal money, or in lieu of such interest and defined portions
of the principal.
1) This section is an exception to Section 76
2) It provides that if it is agreed between the parties that rents and profits received by the
mortgage are to be taken by him in lieu of interest on the mortgage-money the
mortgagee is under no liability to give accounts of the income.
THANK YOU