The Ultimate Battle: Mortgagor’s Shield vs. Mortgagee’s Sword

Imagine paying off the last installment of your 20-year home loan. It is a moment of immense relief and accomplishment. You expect to get your property back, free from any claims. This expectation is not just a hope; it is a powerful legal right enshrined in the property Act, 1882. A mortgage is not a one-way street; it creates a dual relationship, a delicate balance of rights and duties for both the borrower (mortgagor) and the lender (mortgagee).

For any serious law student, especially those preparing for judiciary exams, moving beyond the definitions and types of mortgages to understand this interplay of rights is critical. This article delves deep into the core provisions of the property Act (Sections 60-77) to explore the rights and liabilities of both parties. We will dissect the mortgagor’s ultimate shield—the right of redemption—and the mortgagee’s ultimate sword—the right of foreclosure or sale.

The Mortgagor’s Position: A Bundle of Rights and Duties

The mortgagor, despite transferring an interest in their property, remains the owner. Consequently, the property Act grants them several rights to protect this ownership, chief among them being the right to get their property back.

The Golden Right: Redemption Under Section 60 of the Property Act

The most fundamental right of a mortgagor is the Right of Redemption. Section 60 of the property Act provides that once the principal money has become due, the mortgagor has a right, on payment or tender of the mortgage money, to get their property back. This right is the heart of any mortgage transaction.

Upon redemption, the mortgagor is entitled to three things:

1. Return of Documents: The return of the mortgage deed and all documents relating to the mortgaged property.
2. Delivery of Possession: If the mortgagee has possession, its restoration to the mortgagor.
3. Re-conveyance or Acknowledgment: A re-transfer of the property (in some mortgages) or a registered acknowledgment that the mortgage has been extinguished.

This right is so absolute that the law jealously guards it. The principle “once a mortgage, always a mortgage” means that nothing can be added to the mortgage deed that clogs, or puts a barrier on, this right of redemption.

The Doctrine of “Clog on Redemption”

Any condition in a mortgage deed that obstructs or prevents redemption is a “clog” and is legally void. The courts will not enforce such a clause.

• Example 1: A condition that the mortgagor cannot redeem the property for 100 years. This is an unreasonable restriction and a clog.
• Example 2: A condition that if the loan is not repaid in 5 years, the mortgagee will become the owner. This is a clog.

Landmark Case Law: Noakes & Co Ltd v Rice [1902] AC 24

• Facts: A publican mortgaged his pub to a brewery. The mortgage deed included a “tie” clause, stating that the publican had to buy all his beer from that specific brewery for the entire lease term, even after the mortgage was repaid.
• Judgment: The House of Lords held that this “tie” was a clog on redemption. The right to redeem means getting the property back in the same state as it was mortgaged, free from any conditions. The tie clause was only valid until the mortgage was repaid.

Other Important Rights of the Mortgagor

Besides redemption, the property Act grants other valuable rights:

• Right to Redeem Separately or Simultaneously (Section 61): A mortgagor who has executed two or more mortgages in favour of the same mortgagee shall be entitled to redeem any one such mortgage separately.
• Right to Inspection and Production of Documents (Section 60B): The mortgagor has the right to inspect and make copies of the documents of title in the mortgagee’s custody.
• Right to Accession (Section 63): If any additions (accessions) are made to the mortgaged property, the mortgagor is entitled to such accessions upon redemption.
• Right to Improvements (Section 63A): Similarly, upon redemption, the mortgagor is entitled to any improvements made by the mortgagee, without being liable to pay their cost unless specific conditions are met.

The Mortgagor’s Liabilities (Implied Covenants)

Rights always come with responsibilities. Section 65 of the property Act lists the duties of a mortgagor, which are implied in every mortgage contract.

• Covenant for Title: The mortgagor is deemed to contract that they have the right to transfer the interest they profess to transfer.
• Duty to Defend Title: If the mortgagee’s possession is disturbed, the mortgagor must defend their own title.
• Duty to Pay Public Charges: The mortgagor must pay all taxes and public charges as long as the mortgagee is not in possession.
• Duty to Not Commit Waste (Section 66): The mortgagor must not do any act that is destructive or permanently injurious to the property, thereby reducing the mortgagee’s security. Committing such waste fraudulently could attract penalties under the Bharatiya Nyaya Sanhita (BNS), 2023.

The Mortgagee’s Position: Securing the Investment

The mortgagee, as the lender, is also armed with a set of rights under the property Act to protect their financial interest. Their primary right is to recover the loan amount.

The Ultimate Remedy: Right to Foreclosure or Sale (Section 67)

Section 67 is the mortgagee’s most powerful tool. It grants the right to obtain a decree from a court that the mortgagor shall be absolutely debarred of his right to redeem (foreclosure) or that the property be sold (sale).

• Foreclosure: This remedy permanently extinguishes the mortgagor’s right of redemption and makes the mortgagee the absolute owner. It is typically available in mortgages by conditional sale and anomalous mortgages.
• Sale: This remedy involves the court ordering the sale of the property. The sale proceeds are then used to pay off the mortgage debt. This is the standard remedy in a simple mortgage and an equitable mortgage.

The right to sue for foreclosure or sale arises when the mortgage money has become due.

Exam Point of View (Judiciary Prep):

• The right of redemption (Sec 60) and the right of foreclosure/sale (Sec 67) are co-extensive. The right to redeem arises when the money is due, and the right to foreclose/sale also arises at the same time.
• A usufructuary mortgagee has no right to sue for foreclosure or sale. Their remedy is to retain possession.

Other Key Rights of the Mortgagee

• Right to Sue for Mortgage Money (Section 68): In certain cases, the mortgagee can sue the mortgagor personally for the debt, for instance, if the mortgagor fails to provide adequate security.
• Right of Private Sale (Section 69): This is a very powerful right available mainly in English mortgages, allowing the mortgagee to sell the property without court intervention. However, this right is subject to several strict conditions. The SARFAESI Act, 2002, has now granted similar powers to banks and financial institutions for most types of mortgages.
• Right to Accession (Section 70): If any accession is made to the mortgaged property, the mortgagee is entitled to such accession for the purposes of their security.

Liabilities of a Mortgagee in Possession (Section 76)

When a mortgagee takes possession of the property (e.g., in a usufructuary mortgage), the property Act imposes strict duties on them to protect the mortgagor’s interests.

• Duty to Manage Prudently: They must manage the property as a person of ordinary prudence would manage their own.
• Duty to Collect Rents and Profits: They must use their best endeavours to collect the rents and profits.
• Duty to Keep Accounts: They must maintain clear and accurate accounts of all sums received and spent. The evidence for these accounts would be governed by the Bharatiya Sakshya Adhiniyam (BSA), 2023.
• Duty to Not Commit Waste: They must not commit any act which is destructive or permanently injurious to the property.

Summary Table: A Balanced View of Rights and Liabilities

Party	Key Rights	Key Liabilities / Duties
Mortgagor	Right of Redemption (Sec 60)	Duty not to commit waste (Sec 66)
	Right to inspect documents (Sec 60B)	Covenant for title (Sec 65)
	Right to accession & improvements (Sec 63, 63A)	Duty to pay public charges (Sec 65)
Mortgagee	Right to Foreclosure or Sale (Sec 67)	Duty to manage property prudently (if in possession) (Sec 76)
	Right to sue for mortgage money (Sec 68)	Duty to keep proper accounts (if in possession) (Sec 76)
	Right of private sale (in some cases) (Sec 69)	Duty not to commit waste (if in possession) (Sec 76)

Conclusion: An Equilibrium of Interests under the Property Act

The relationship between a mortgagor and a mortgagee is a symbiotic one, meticulously balanced by the property Act. While the mortgagor’s right of redemption is the soul of the transaction, ensuring they can reclaim their property, the mortgagee’s right to foreclosure or sale provides the necessary teeth to enforce the security. For students of law, a thorough understanding of this equilibrium is paramount. It is not merely a list of sections but a logical framework that underpins a vast number of financial and property transactions in our economy.

Do you believe the SARFAESI Act has tilted the balance of power too much in favour of banks? Share your perspective in the comments below!