16.

8 Mortgage
Dr Medha Kolhatkar: Drafting, Pleading and Conveyancing, 2nd ed
Dr Medha Kolhatkar

Dr Medha Kolhatkar: Drafting, Pleading and Conveyancing, 2nd ed > Medha Kolhatkar: Drafting,
Pleading and Conveyancing, 2e, PB > CHAPTER XVI CONVEYANCING — PRACTICE AND
PROCEDURE > MORTGAGE

CHAPTER XVI CONVEYANCING — PRACTICE AND PROCEDURE

MORTGAGE

16.8 Mortgage
The expression Mortgage is defined under section 58 of the Transfer of Property Act, 1882.

A mortgage is the transfer of an interest in specific immovable property for the purpose of securing 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 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.

In case of mortgage there is transfer of an interest in an immovable property. The purpose of such transfer is to
secure a loan.
16.8.1 Kinds of Mortgages

The Transfer of Property Act under section 58, states six kinds of mortgages.
16.8.1.1 Simple mortgage

In simple mortgage:

(i) The mortgagor does not deliver possession of the mortgaged property.
(ii) The mortgagor binds himself personally to pay the mortgage money.
(iii) If the mortgagor fails to pay according to the contract then the mortgagee is entitled to cause the
mortgaged property to be sold.
(iv) The proceeds of sale are to be applied, so far as may be necessary, in payment of the mortgage money.

16.8.1.2 Mortgage by conditional sale

In the case of mortgage by conditional sale:

(i) The mortgagor ostensibly sells the mortgaged property.

(ii) On the condition that on default of payment of the mortgage money on a certain date, the sale shall
become absolute, or
(iii) On the condition that such payment being made, the sale shall become void, or
(iv) On such payment being made, the mortgage property is to be retransferred.
(v) The said transaction must be stated in the mortgage deed.
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16.8 Mortgage

(vi) The mortgagee, thus, in case of default can exercise the right of foreclosure.

16.8.1.3 Usufructory mortgage

The peculiar features of this kind of mortgage are as follows:

(i) The mortgagee is put in possession of the mortgaged property as an essential part of the transaction.
(ii) The mortgagee continues to remain in possession of the property till the payment of the mortgage money.
(iii) The repayment is to be made from the rents and profits of the property.
(iv) The property is returned when the amount due is personally paid or adjusted towards the rents and profits
received.

16.8.1.4 English mortgage

In the case of an English mortgage:

(i) The mortgagor binds himself to repay the mortgage money on a certain date.
(ii) The mortgagor transfers the mortgaged property absolutely to the mortgagee.
(iii) There is a covenant that the mortgagee will retransfer the property to the mortgagor upon payment of the
mortgage money as agreed.
(iv) The mortgagee can exercise the right of sale in case of mortgagors default.

16.8.1.5 Mortgage by deposit of title deeds/equitable mortgage

Mortgage by deposit of title deeds is also called an equitable mortgage. The peculiar features of this kind of
mortgage are:

(i) This mortgage is created where a person in any of the following towns, namely the towns of Calcutta,
Chennai, and Mumbai and in any other town which the state government may, by notification in the Official
Gazette, specify, in this behalf.
(ii) The mortgagor or his agent delivers to the mortgagee all the documents of title deed with intention to
create a security thereon is a mortgage by deposit of title deeds.
(iii) There is no delivery of possession of property in this kind of mortgage.

16.8.1.6 Anomalous mortgage

The features of an anomalous mortgage are stated below:—

(i) A mortgage which is not of any of the kinds stated herein above is called an anomalous mortgage.
(ii) This mortgage is a mixture of two or more of the mortgages above mentioned.

16.8.2 Drafting of Mortgage Deed

The following points shall be included while drafting a mortgage deed.

(a) Title to deed

(b) Date and place
(c) Description of the parties (mortgagor and mortgagee)
(d) Introductory recitals
(e) Narrative recitals
(f) Testatum
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16.8 Mortgage

(g) Terms and conditions of the mortgage deed—the terms and conditions in the mortgage deed will vary
according to the form or type of mortgage.
(h) Habendum—To Have and To Hold
(i) Testimonium
(j) Schedule of the property
(k) Execution and attestation

16.8.3 Stamp Duty

All documents of mortgage of any kind, except equitable mortgage, including second mortgage and sub mortgage
or charge, are chargeable under Article 40 Schedule 1 of the Indian Stamp Act, 1899.
16.8.4 Registration

All the documents of mortgage as stated above, except an agreement to mortgage, require compulsory registration
under the Registration Act, 1908.
16.8.5 Specimen

Specimen No. I

DEED OF MORTGAGE

THIS DEED OF MORTGAGE is made at this day of ________20_______ BETWEEN

Mr./Mrs.________

Age: ________

Occupation:_________

Residing at: ________

PAN: __________

Hereinafter referred to as ‘The Mortgagor’

(which expression shall unless repugnant to the context mean and include his heirs executors, administrators and
assigns) Party of the One Part.

AND

Mr./Mrs.________

Age: ________

Occupation:_________

Residing at: ________

PAN: __________

Hereinafter referred to as “The Mortgagee”.

(which expression shall unless repugnant to the context mean and include his heirs executors, administrators and
assigns) Party of the Other Part.

WHEREAS
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16.8 Mortgage

(a) The mortgagor is absolutely seized and possessed of the immovable property bearing CTS No.
__________ admeasuring ________ sq. mtrs., i.e., land with building on it and more particularly described
in the schedule written herein below and hereinafter referred to as the mortgage property/said property.
The said property is the self acquired property of the mortgagor herein.
(b) The mortgagor is in dire need of money for the medical treatment of the mortgagor’s wife who is to undergo
kidney transplant and other medical treatment and also for the business purposes of the mortgagor.
(c) The mortgagor therefore approached the mortgagee to give him a loan of Rs. _______ for the
aforementioned reasons and after due discussions and deliberations between the mortgagor and
mortgagee, the mortgagee has agreed to advance loan to the mortgagor on certain terms and conditions
against the said/mortgaged property of the mortgagor as security for the repayment of the loan.
(d) Thus the mortgagor has agreed to mortgage the said property in favour of the mortgagee as a collateral
security. The parties hereto have arrived at an understanding which they have decided to reduce into
writing being the presents as follows

NOW THIS DEED WITNESSES AS FOLLOWS:

(1) That the mortgagor does hereby mortgage the said/mortgaged property more particularly described in
Schedule i.e. _____ sq. mtrs., i.e., land with building on it and more particularly described in the Schedule
written herein below and hereinafter referred to as the mortgage property/said /mortgaged property in
consideration of the amount of Rs. ________/- lent and advanced by the mortgagee.
(2) That the mortgagor is liable to pay unto the mortgagee an amount of Rs. __________/- per month and the
mortgagor hereby agrees to repay the amount of said debt within a period of ______ years from the date of
execution of these presents.
(3) The mortgagor hereby assures to pay unto the mortgagee the said amount of Rs. ____ alongwith interest
thereon at the rate of _________ % per annum.
(4) That the mortgagor assures unto the mortgagee that the mortgage property/ said property is his absolute
property and no one else has any right, title or interest in the same and further more the mortgagor hereby
assures unto the mortgagee that the said property is free from all encumbrances.
(5) That the mortgagor hereby assures and undertakes unto the mortgagee that he will not deal with the said
property in any manner so as to prejudicially affect the rights of the mortgagee.
(6) That on payment of the mortgage money that is the loan amount together with interest and other monies as
may be due and payable to the mortgagee by the mortgagor within the stipulated period then the
mortgagor shall be entitled to claim redemption of the said property from the mortgagee.
(7) And it is further agreed and declared by the mortgagor that if the mortgagor fails to pay the loan amount,
i.e., Rs. ______/- with interest and all other monies when the same shall become due and payable under
these presents the mortgagee shall be entitled to claim foreclosure of the mortgage and in the default of
the mortgagor the mortgagee shall be entitled to enforce all such remedies available against the mortgagor
as are available to the mortgagee under simple mortgage.
(8) It is further agreed that during the pendency of the security hereby created and until the repayment of the
mortgage amount the mortgagor will get insured and keep insured the building and structure standing on
the said land against any loss and or damages due to fire or any other accident in the sum of atleast Rs.
_________/- with some insurance company of repute and pay all premium on the insurance policy as and
when it becomes due and payable in respect thereof to such company and shall handover the policy
document to the mortgagee duly endorsed in his name as assignee.
(9) That all the expenses towards stamp duty, registration charges and other incidental expenses thereto are
to be borne by the mortgagor.

SCHEDULE

All that piece and parcel of the land ___________admeasuring _________ sq. mtrs. together with structure
standing thereon by name _____ admeasuring _____ sq. mtrs., situate within registration division and district
__________ sub division and Taluka ___________, within the limits of ________ Corporation, bearing CTS No.
_______ plot No. ________ carved out of the layout of S. No. ___________ and bounded by as follows:
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16.8 Mortgage

On or towards

East:

South:

West :

North:

IN WITNESS WHEREOF THE PARTIES HERETO HAVE SIGNED HEREUNDER AT _______ AT THIS
_________DAY OF_______ 20________

Sd. of Mortgagor:

Sd. of Mortgagee:

WITNESS

1. ____________

2. ____________

Specimen No. II

Deed of Usufructory Mortgage

THIS DEED OF Usufructory Mortgage is executed at _____on this _____day _____20— BETWEEN

XYZ Pvt. Ltd, through its Director_____ (Company incorporated under the provisions of the Companies Act,
1956/2013 having its registered office at_____.

(Hereinafter referred to as “The Mortgagor”).

(which expression shall unless repugnant to the context or meaning thereof be deemed to mean and include its
successors, executors, administrators and assigns) of the ONE PART.

AND

Name: _______

Age: __________

Occupation: _____

Residing at: _____

PAN: _________

(Hereinafter referred to as “The Mortgage”).

(which expression shall unless repugnant to the context or meaning thereof be deemed to mean and include his
heirs, executors, administrators and assigns) of the OTHER PART

WHEREAS

I) The Mortgagor is the owner and is otherwise well and sufficiently entitled, seized and possessed of the
property at _____and which is more particularly described in the Schedule hereunder written (hereinafter
referred to as “the said property/Mortgage property”).
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II) The Mortgagor is in need of finance to expand its business therefore approached the Mortgagee to provide
the necessary finance of Rs. _____/-.
III) The Mortgagee has agreed to lend and advance and has advanced Rs. _____/-(Rupees in words____ )
with interest @ _______ % p.a. against the security of mortgage/said property by way of Usufructory
mortgage on certain terms and conditions stated herein below.

NOW THIS INDENTURE WITNESSES as follows:

1) That in consideration of the sum of Rs. _____/- (Rupees ____ only) paid to the Mortgagor by the
Mortgagee on or before execution hereof (the receipt whereof the Mortgagor hereby acknowledges and
admits.) the Mortgagor hereby transfers by way of usufructory mortgage, to the mortgagee the mortgaged
property/said property more particularly described in the Schedule annexed hereto inclusive of right of
possession of the mortgage property with intention that the Mortgagee shall have right to reserve/retain
such possession until payment of mortgage money, and to receive rents and profits and to appropriate the
same (after paying the necessary taxes, levies as may become payable from time to time) in lieu of interest
on the said sum of Rs. _____/-
2) The Mortgagor hereby declares and assures unto the Mortgagee that the mortgage property is free from all
encumbrances or charge and that the Mortgagor has duly paid and discharged all dues and liabilities with
respect to the said property including the Municipal taxes, levies etc. till date.
3) The Mortgagee hereby covenants that the mortgagor may redeem the mortgage at any time after _____
years on repaying the said loan of Rs. _____/- with interest. On such repaying, the Mortgagee will re-
transfer the mortgaged property to the Mortgagor and will put him in actual possession of the property.
4) The Mortgagee at the cost and expense of the Mortgagor shall be entitled to insure the said property
against any loss of damage to the said property by fire etc.
5) The Mortgagor hereby declares that no winding up petition is pending against the Mortgagor before any
court of law and neither have any winding-up notices been received by the Mortgagor.
6) The parties hereby covenant that the Mortgagor shall register this Mortgage deed with the Registrar of
Companies under the provision of the Companies Act, 1956/2013.
7) That the parties shall have all such rights and be subject to all such liabilities of a Mortgagor and
Mortgagee provided in the Transfer of Property Act 1882 as may be applicable to them.
8) The Stamp duty and registration charges payable on this instrument as also all other incidental costs and
expenses thereof shall be borne and paid by the Mortgagor.

Schedule of the Property

All that piece and parcel of the land ___________admeasuring _________ sq. mtrs. together with structure
standing thereon by name _____ admeasuring _____ sq. mtrs., situate within registration division and district
__________ sub-division and Taluka ___________, within the limits of ________ Corporation, bearing CTS No.
_______ plot No. ________ carved out of the layout of S. No. ___________ and bounded by as follows:

On or towards:

East:

South:

West :

North:

IN WITNESS WHEREOF THE PARTIES HERETO HAVE SIGNED HEREUNDER AT _______ ON THIS
_________DAY OF _______ 20________

Sd. of Mortgagor:

Sd. of Mortgagee:
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16.8 Mortgage

WITNESS

1. ____________

2. ____________

End of Document