Introduction:-

Mortgage is the one kind of transfer and it is the one kind of title transfer of
specific immovable property. Section 5 of the Transfer of Property Act,1882
defines “transfer of property”. Transfer of property means an act by which
a living person conveys property to one or more other living persons.

Meaning of mortgage

Mortgage is a conveyance of title to property that is given as security for the

payment of a debt or the performance of a duty and that will become void upon
payment or performance according to the stipulated terms.

According to section 58(a) of the Transfer of Property Act 1882,

“A mortgage is the transfer of an interest in specific immoveable
property or 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;
 The instrument (if any) by which the transfer is effected is called a
mortgage-deed.

According to section 53-D TP Act, 1882, An immovable property under registered

mortgage must not be re-mortgaged or sold without the written consent of the
mortgagee, and any re-mortgage or sale made otherwise must be void.
HBFS v. A Mannan, 41 DLR (AD).

In the case of Salehon V. Muhammad

Held: A mortgage is a transfer of interest which comes into existence, when the
contract of mortgage is entered into and not necessarily when the consideration is
paid.
Rights and Liabilities of Mortgagor [Sections 60-62,63,83 of TP Act
1882]:-

 Right of mortgagor to redeem:-

 According to s 60 of TP Act, at any time after the principal money has
become due, the mortgagor has a right, on payment or tender, at a proper
time and place, of the mortgage-money, to require the mortgagee
 to deliver to the mortgagor the mortgage-deed and all documents relating to
the mortgaged property which are in the possession or power of the
mortgagee,
 where the mortgagee is in possession of the mortgaged property, to deliver
possession thereof to the mortgagor, and
 at the cost of the mortgagor either to re-transfer the mortgaged property to
him or to such third person as he may direct, or to execute and (where the
mortgage has been effected by a registered instrument) to have registered an
acknowledgement in writing that any right in derogation of his interest
transferred to the mortgagee has been extinguished.
 Acknowledgement that right has been extinguished.
 Extinguishment of right by (1) the act of the parties, or (2) the decree of the
court.

It is the most important right of the mortgagor, through which, the mortgagor after
paying-off the money becomes entitle to get back the property. At any timeafter
the mortgage- money has become due, the mortgagor has a right on the payment of
the mortgage-money to require the mortgagee to reconvey the mortgaged property
to him. This right of the mortgagor, through which he is entitled to get the property
returned to him, contemporaneously with the discharge of his obligation, is called
the right of redemption.

Clog on redemption

Any provision inserted to prevent redemption on payment or performance of the

debt or obligation for which the security was given is what is meant by a clog or
fetter on the equity of redemption and is therefore void. It follows from this, that
‘once a mortgage always a mortgage’.

There are no fixed qualifying circumstances in determining what would or would

not amount to a clog. It has been something that would have to be decided on the
facts and circumstances of the case. There are certain situations where it was held
that the covenant was a clog on the right.

1- Long Term Mortgages

Long term mortgages are common in cases of usufructuary mortgages. A term of

95 years or 100 years would definitely extend beyond one’s lifetime and
superficially seems like a clog. Taking cognizance of the same, the Supreme Court
has ruled that only by virtue of lengthy period, a mortgage would not amount to a
clog, there must exist a presence of undue advantage or fraud to term it as a clog.

2- Condition of Sale of Property

A covenant that a mortgaged property, if not redeemed within a fixed time, would
translate into a sale is a clog. However if there is a separate agreement whereby the
mortgagor executes a sale deed in favor of the mortgagee as an independent
transaction, such sale deed is valid.

3- Penalty in case of default

Payment of a penalty if there is default on behalf of the mortgagor can

reasonable but in certain situations it may be unreasonable and penal. Certain
situations where a penalty has been held to be unreasonable are –

(a) On default, compound interest is stipulated even when the original interest
was very high.

(b)On default, increased rate of interest would apply from the time the
agreement is made.

By merely the virtue of there being a high interest does not lend the condition to be
a clog on redemption unless it could be shown that there was undue influence in
the dealing.
 4- Collateral Benefit to Mortgagor

A mortgagor may avail of a collateral benefit either during the subsistence of the
mortgage, which is valid, or after the redemption, which in some cases is not valid.
In a case of Kreglinger v. New Patagonia Meat and Cold Storage Co. Ltd.

5- Subsequent Agreement to postpone redemption

A subsequent agreement which becomes an obstruction to the mortgagee by

creating a personal obligation is a clog on his right to redemption. The reason is
that unless the agreement forms a charge on the property, the mortgagee is not
liable to pay any sum arising from his personal obligation except the mortgage
amount.

CASES ON EQUITY OF REDEMPTION

In Seth Gangadhar v. Shankar Lal and Ors, it was admitted that the transaction was
that of a mortgage and Section 60 of the Transfer of Property Act was applicable.
The Court held that therein the term of mortgage was 85 years and there existed no
stipulation entitling the mortgagor to redeem during that term which had not
expired. The document in question was held by this Court to be containing a
stipulation creating a clog on the equity of redemption which was found to be
illegal.

In Pomal Kanji Govindji and Ors. v. Vrajlal Karsandas Purohit and Ors, the Court
held that whether a clause used in a transaction of mortgage amounted to clog
on the equity of redemption is a mixed question of law and fact. In that case,
there existed a provision for payment of interest at the rate of half per cent
per annum payable on the principal amount at the end of the long period which led
the Court to conclude that there was a clog on equity of redemption. Furthermore,
in that case, materials were brought on record to show that the transaction was
entered into by way of security for the loan obtained.

In Shivdev Singh and Anr. v. Sucha Singh and Anr. the Court was dealing with a
case of anomalous mortgage. Therein the mortgage was to remain operative for a
period of 99 years. It was in that situation, this Court opined that the original
owner having been in great financial difficulty, the mortgagees took advantage of
the said fact and incorporated a 99 year's term which constituted a clog on the
equity of redemption. So, any condition imposed in the deed of mortgage itself
which places any restrictions on the right of redeeming the mortgage is a clog in
the equity of redemption and, as such, repugnant to law and void [Mir Zaman V.
Ashraf khan, PLD 1959].

 Exercise of the right of redemption:

The mortgagor’s right of redemption is exercised,-

i. By paying or tendering mortgage-money to the mortgagee outside the court, i.e.

privately;

ii. By depositing the amount in the court; and

iii. By a suit for redemption, payment or tender. Tender means an unconditional

offer to pay the money under such circumstances that the mortgagee may receive
the money there.

 Extinguishment of right of redemption:-

The mortgagor’s right of redemption is extinguished:

a) By foreclosure (section 67);
b) When the mortgagee has exercised power of sale (section 68);
c) When it becomes barred under the Limitation Act, 1908.

 Redemption of portion of mortgaged property:-

Section 60 of TP Act also provides that a person interested in a share only of the
mortgaged property is not entitled to redeem his own share only, on payment of a
proportionate part of the amount remaining due on the mortgage, except only
where a mortgagee, or, if there are more mortgagees than one, all such mortgagees,
has or have acquired, in whole or in part, the share of a mortgagor.

 Right to redeem separately or simultaneously:-

According to s 61 of TP Act, a mortgagor who has executed two or

more mortgages in favour of the same mortgagee shall, in the absence of a contract
to the contrary, when the principal money of any two or more of the mortgages has
become due, be entitled to redeem any one such mortgage separately, or any two or
more of such mortgages together.
A B LAND E 500

A B LAND F 1000

(mortgagor) (mortgagee)

In the case of Muhammad Hossain V. Inayat Ali, PLD 1952, it was held that “ If
the plaintiffs wish to redeem the first two mortgages they must redeem them
entirely and cannot ask for their own share only. They must pay the entire
mortgage money and if that is so, they must obtain the entire property under the
mortgage”.

 Obligation to transfer to third party instead of re-transference to

mortgagor :

Section 60-A states that-

(1) Where a mortgagor is entitled to redemption, then, on the fulfilment of any

conditions on the fulfilment of which he would be entitled to require a re-transfer,
he may require the mortgagee, instead of re-transferring the property, to assign the
mortgage-debt and transfer the mortgaged property to such third person as the
mortgagor may direct; and the mortgagee shall be bound to assign and transfer
accordingly.

(2) The rights conferred by this section belong to and may be enforced by the
mortgagor or by any encumbrancer notwithstanding an intermediate encumbrance;
but the requisition of any encumbrancer shall prevail over a requisition of the
mortgagor and, as between encumbrancers, the requisition of a prior encumbrancer
shall prevail over that of a subsequent encumbrancer.

(3) The provisions of this section do not apply in the case of a mortgagee who is or
has been in possession.”
LAND MORTGA
MORTGA
GEE
GOR

3rd PARTY
  Right to inspection and production of documents :

Section 60-B states that-

“A mortgagor, as long as his right of redemption subsists, shall be entitled at all

reasonable times, at his request and at his own cost, and on payment of the
mortgagee's costs and expenses in this behalf, to inspect and make copies or
abstracts or, extracts from, documents of title relating to the mortgaged property
which are in the custody or power of the mortgagee”.

This section makes it clear that a mortgagor has a right to inspect and take copies
of documents of title relating to the mortgaged property which are in possession of
the mortgagee. This right subsists so long as his right of redemption subsists.

In the case of Jaya Singh V. Krishna, AIR 1985 S.C. 1646, it was held that:

“The right of mortgage-deed can come to an end only in manner known to law”.

 Right of usufructuary mortgagor to recover possession:-

Section 62 of TP Act provides that in the case of a usufructuary mortgage, the

mortgagor has a right to recover possession of the property together with the
mortgage-deed and all documents relating to the mortgaged property which are in
the possession or power of the mortgagee,-

Where the mortgagee is authorized to pay himself the mortgage-money from the
rents and profits of the property,-when such money is paid;

Where the mortgagee is authorized to pay himself from such rents and profits or
any part thereof a part only of the mortgage-money,-when the term(if any)
prescribed for the payment of the mortgage-money has expired and the mortgagor
pays or tenders to the mortgagee the mortgage-money or the balance thereof or
deposits it in court.

 Accession to mortgaged property:

Section 63 says that-

“Where mortgaged property in possession of the mortgagee has, during the

continuance of the mortgage, received any accession, the mortgagor, upon
redemption, shall, in the absence of a contract to the contrary, be entitled as against
the mortgagee to such accession.

Accession acquired in virtue of transferred ownership: Where such accession has

been acquired at the expense of the mortgagee, and is capable of separate
possession or enjoyment without detriment to the principal property, the mortgagor
desiring to take the accession must pay to the mortgagee the expense of acquiring
it. If such separate possession or enjoyment is not possible, the accession must be
delivered with the property; the mortgagor being liable, in the case of an
acquisition necessary to preserve the property from destruction, forfeiture or sale,
or made with his assent, to pay the proper cost thereof, as an addition to the
principal money, with interest at the same rate as is payable on the principal, or,
where no such rate is fixed, at the rate of nine percent per annum.

In the case last mentioned the profits, if any, arising from the accession shall be
credited to the mortgagor.

Where the mortgage is usufructuary and the accession has been acquired at the
expense of the mortgagee, the profits, if any, arising from the accession shall, in
the absence of a contract to the contrary, be set off against interest, if any, payable
on the money so expended”.

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 entitled to such
accession. This rule is only an application of the equitable principle enacted in
section 90 of the Trusts Act, 1882.

Ways in which accession arise:

Accession or accretion mat arise in any one of the following ways:

I. Reasonable way

II. Artificial way

I. Reasonable way: The general rule is that reasonable or natural accession to the
mortgaged property are subject to redemption. For instance, where the area of a
village mortgaged without specification of boundaries was increased as a survey
settlement, the mortgagor was held to be entitled to the increase.

II. Artificial way: Artificial or acquired accessions have been sub-divided into:

(a) Separable accessions: Where the accession is capable of separate possession or

enjoyment without detriment to the principle property, the mortgagor desiring to
take the accession must pay to the mortgagee the expense of acquiring it. For
instance, where the mortgagee, during the continuance of the mortgage sets up a
temporary structure on the mortgaged property, the mortgagor, if he desires to take
it, must pay the cost of the structure to the mortgagee.

(b) Inseparable accessions: If separate possession or enjoyment is not possible, the

accession must be delivered with the property. The mortgagor is bound to pay
compensation only in two cases:

(i) where the acquisition was necessary to preserve the property from destruction,
forfeiture or sale; (ii) where it was made with the mortgagor’s consent.

 Improvements to mortgaged property:

Section 63-A says that, “(1) Where mortgaged property in possession of the
mortgagee has, during the continuance of the mortgage, been improved, the
mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be
entitled to the improvement; and the mortgagor shall not, save only in cases
provided for in sub-section (2), be liable to pay the cost thereof.

(2) Where any such improvement was effected at the cost of the mortgagee and
was necessary to preserve the property from destruction or deterioration or was
necessary to prevent the security from becoming insufficient, or was made in
compliance with the lawful order of any public servant or public authority, the
mortgagor shall, in the absence of a contract to the contrary, be liable to pay the
proper cost thereof as an addition to the principal money with interest at the same
rate as is payable on the principal, or, where no such rate is fixed, at the rate of
nine per cent per annum, and the profits if any, accruing by reason of the
improvement shall be credited to the mortgagor.”

General rule: Sub-section

(1) lays down the general rule that ordinarily a mortgagee is not at liberty to make
improvements and charge the mortgagor therewith. With this end in view, the sub-
section laid down that where mortgaged in possession of the mortgagee has been
improved, the mortgagor upon redemption is entitled to the improvement. The
object is to prevent mortgagee from spending large sums of money and then
charging the mortgagor for it and in consequence make it impossible for him to
redeem.

 Exceptions: Sub-section (2) lays down that the mortgagor shall be liable to pay
the cost of improvements in the following cases only,-

If improvement was necessary to preserve the property from destruction or

deterioration, or

Was necessary to prevent the security from becoming insufficient, or

Was made in compliance with the lawful order of any public servant or public
authority.

In the case of State Bank of Pakistan V. Khaledar Ma, 14 DLR 735, it was held
that, “Mortgagor is liable to pay cost for improvement when any when any of the
tests under the section is fulfilled.”

 Renewal of lease:

Section 65 A of the act has mentioned about the mortgagor’s right. 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.

If the mortgagee of as leasehold obtains as renewal thereof during the continuance

of the mortgagor is entitled to the benefit of the new lease, on redemption, unless
the contract otherwise provides (sec.64).
  Deposit in Court:

The mortgagor can, after the date for redemption has been passed, deposit the
mortgage amount due according to him, in court. On such deposit being made, the
Court will serve a written notice thereof on the mortgagee. If the mortgagee
accepts the payment, he can withdraw the moneys deposited in the Court, only his
depositing in the Court mortgage deed and all other documents relating to the
mortgaged property in his possession, which shall then be handed over the
mortgagor.

If the mortgagee has been in possession of the mortgaged property, he can also be
called upon to deliver possession to the mortgagor and (at mortgagors’ costs), to
execute as re-transfer of the property to the mortgagor or his nominee (sec.83). If
the amount is found to be the proper amount due, the mortgagee shall not be
entitled to any interest after the date of deposit (sec.84).

 Right to wastes:

Section 66 of the act, 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.

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.

۩ Conclusion:-

Mortgage is a transfer of an interest in specific immovable property as a security

for the repayment of a monetary liability. This liability could be arising out of
money already advanced or to be advanced; it could be future debt or it could be
pecuniary liability arising out of the non-performance of any engagement. A
mortgage corresponds to the Hypotheca of Roman Law. The creditors, on the
failure of the debtor to pay the debt, could being the debtor’s property to sale and
recoup him. To conclude it can be said that the provisions of the Transfer of
Property Act, 1882.