“MORTGAGE AND ITS KINDS UNDER THE

TRANSFER OF PROPERTY ACT, 1882”

SIKSHA ‘O’ ANUSANDHAN NATIONAL INSTITUTE OF LAW (SNIL)

SIKSHA ‘O’ ANUSANDHAN (DEEMED TO BE UNIVERSITY),

BHUBANESWAR
 CONTENTS
INTRODUCTION........................................................................................................................................................2

DEFINITION OF MORTGAGE (SECTION 58).............................................................................................2

PARTIES TO A MORTGAGE............................................................................................................................... 3

KINDS OF MORTGAGES UNDER SECTION 58.........................................................................................3

1. SIMPLE MORTGAGE [SECTION 58(B)]...............................................................................................3

2. MORTGAGE BY CONDITIONAL SALE [SECTION 58(C)].........................................................3
3. USUFRUCTUARY MORTGAGE [SECTION 58(D)]........................................................................4
4. ENGLISH MORTGAGE [SECTION 58(E)]...........................................................................................4
5. MORTGAGE BY DEPOSIT OF TITLE DEEDS [SECTION 58(F)].............................................4
6. ANOMALOUS MORTGAGE [SECTION 58(G)].................................................................................5
RIGHTS AND LIABILITIES OF MORTGAGOR AND MORTGAGEE..............................................5

CONCLUSION............................................................................................................................................................. 6

CASE ANALYSIS.......................................................................................................................................................6

1. TULSI V. CHANDRIKA PRASAD (2006) 8 SCC 322.......................................................................6

2. K.J. NATHAN V. S.V. MARUTHI RAO, AIR 1965 SC 430............................................................6
BIBLIOGRAPHY........................................................................................................................................................ 6
 INTRODUCTION

The law of property forms the bedrock of civil jurisprudence, and among its many facets,
the concept of mortgage holds significant importance. A mortgage is a legal mechanism
that allows an individual to secure a loan by transferring an interest in immovable
property to the lender. This practice not only facilitates the flow of credit in the economy
but also provides a legal safeguard for both the borrower (mortgagor) and the lender
(mortgagee). In India, the law pertaining to mortgages is codified under the Transfer of
Property Act, 1882, particularly in Chapter IV, which spans Sections 58 to 104. These
provisions define various types of mortgages, the formalities for their creation, and the
rights and liabilities of the parties involved. Understanding the nature and kinds of
mortgages is crucial not only for legal practitioners but also for financial institutions, real
estate stakeholders, and common citizens who engage in property-related transactions.
This assignment delves into the statutory provisions of the Transfer of Property Act,
elucidating the definition, essential features, and different forms of mortgages recognized
under the Act, supported by landmark judicial interpretations.

DEFINITION OF MORTGAGE (SECTION 58)

"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."

Key Elements:

1. Transfer of interest – not ownership, just a right in the property.

2. Specific immovable property – must be clearly identified.

3. Purpose – to secure the repayment of money or fulfillment of a liability.

 PARTIES TO A MORTGAGE
Mortgagor: The person who transfers the interest in the property.

Mortgagee: The person in whose favour the interest is transferred.

KINDS OF MORTGAGES UNDER SECTION 58

1. SIMPLE MORTGAGE [SECTION 58(B)]

In a simple mortgage, the mortgagor:

- Does not deliver possession.

- Binds himself personally to repay the debt.

- Agrees that in default, the mortgagee has the right to cause the mortgaged property to be
sold through a court decree.

Example: A mortgages his house to B without handing over possession but promises to
repay Rs. 5 lakhs. If he fails, B can approach the court to sell the house.

Case Law: Kedar Nath v. S.N. Bilgrami – A simple mortgage creates a charge on the
property but not possession.

2. MORTGAGE BY CONDITIONAL SALE [SECTION 58(C)]

Here, the mortgagor ostensibly sells the property to the mortgagee with a condition that:

- The sale shall become absolute if the loan is not repaid.

- The sale shall become void if the loan is repaid.

Essentials:

- Must be in writing.

- The condition must be part of the same document as the sale.

Case Law: Tulsi v. Chandrika Prasad – The intention of the parties is crucial to
distinguish it from an actual sale.
3. USUFRUCTUARY MORTGAGE [SECTION 58(D)]
In this type:

- Possession is delivered to the mortgagee.

- The mortgagee can enjoy income (rents, profits) from the property in lieu of interest or
principal.

- No personal liability on the mortgagor.

- Mortgagee cannot sue for sale or foreclosure.

Example: A gives his land to B as security. B can collect the crops and use the income to
recover the loan amount.

4. ENGLISH MORTGAGE [SECTION 58(E)]

Under this:

- The mortgagor binds himself to repay on a certain date.

- Transfers the property absolutely to the mortgagee.

- Mortgagee agrees to retransfer upon repayment.

Essentials:

- Absolute transfer with a personal obligation to repay.

- Redeemable on repayment.

Case Law: Narandas Karsondas v. S.A. Kamtam – An English mortgage is both a

personal contract and a conditional transfer.

5. MORTGAGE BY DEPOSIT OF TITLE DEEDS [SECTION 58(F)]

Also known as an equitable mortgage:

- No need for a written document.

- Occurs in notified towns (e.g., Mumbai, Chennai, Kolkata).

- Title deeds are deposited with the intent to create a security.

Essentials:

- Delivery of title deeds.

- Intention to create security.

- Must be in a notified area.

Case Law: K.J. Nathan v. S.V. Maruthi Rao – Valid mortgage can be created by
constructive delivery of documents.

6. ANOMALOUS MORTGAGE [SECTION 58(G)]

This is a mortgage that does not fall under the above five categories and may contain a
mix of features.

Example: A mortgage that allows usufruct rights to the mortgagee but also has a clause
for sale upon default.

Case Law: K. Sarada v. C. Parthasarathi – Parties are bound by the terms and conditions
of the contract unless they violate public policy or statute.

RIGHTS AND LIABILITIES OF MORTGAGOR AND

MORTGAGEE
Rights of Mortgagor:

- Right to redeem (Section 60)

- Right to inspection and production of documents

- Right to accession and improvement

Liabilities of Mortgagor:

- Duty to pay mortgage money.

- Duty to indemnify for defective title.

Rights of Mortgagee:

- Right to sell (with or without court intervention)

- Right to possession (in usufructuary and certain English mortgages)

- Right to foreclosure (in conditional sale)

CASE ANALYSIS

1. TULSI V. CHANDRIKA PRASAD (2006) 8 SCC 322

In this case, the Supreme Court dealt with the distinction between a mortgage by conditional sale
and a sale with a condition of repurchase. The Court emphasized that the real nature of the
transaction must be ascertained from the intention of the parties. The Court held that merely using
the words of conditional sale does not make it a mortgage unless the intention was to treat it as a
security for a debt. The Court ruled in favour of the mortgagor, concluding that the transaction
was indeed a mortgage by conditional sale.

2. K.J. NATHAN V. S.V. MARUTHI RAO, AIR 1965 SC 430

This case clarified the essentials of a mortgage by deposit of title deeds (equitable mortgage). The
Supreme Court ruled that physical delivery of documents is not always necessary; constructive
delivery and the intention to create a security are sufficient. The Court observed that such
mortgages can be valid even without registration if they meet the criteria under Section 58(f).
 CONCLUSION

The concept of mortgage, as codified in the Transfer of Property Act, 1882, plays a
foundational role in balancing the interests of borrowers and lenders while ensuring the
legal sanctity of immovable property transactions. The classification of mortgages into
six distinct types—each with unique features, rights, and remedies—demonstrates the
Act’s attempt to provide flexibility and fairness in financial dealings involving property.
By defining clear obligations for both mortgagor and mortgagee, the law minimizes
ambiguity and offers structured remedies in case of default or disputes.
Judicial interpretations over the years have further refined these principles, reinforcing
that the true nature of a mortgage must be determined by the intent of the parties rather
than just the language used in documents. This has helped courts protect the rights of
borrowers against unjust enrichment and exploitation, while also upholding the security
rights of creditors.

In today’s economic context, where credit and property rights intersect more than ever, a
sound understanding of mortgage law is not just relevant to lawyers or bankers but also to
every individual engaging with real estate. Therefore, mastering the legal and practical
nuances of mortgages under the Transfer of Property Act is vital for ensuring equitable
and efficient transactions in the property market.

BIBLIOGRAPHY
1. Transfer of Property Act, 1882 – Bare Act

2. Mulla, The Transfer of Property Act

3. Avtar Singh, Law of Property

4. Relevant Supreme Court and High Court case laws