The rights and liabilities of a mortgagee are as under:
I. Right to foreclosure for sale
In the absence of a contract to the contrary, the mortgagee has, at any time after the
mortgage money has become due to him, and before a decree has been made for the
redemption of the mortgaged property, or the mortgage money has been paid or deposited
as hereinafter provided, a right to obtain from the Court a decree that the mortgagor shall
be absolutely debarred or his right to redeem the property, or a decree that the property be
sold.
II. Right to sue for mortgage money
The mortgagee has a right to sue for the mortgage money in the following cases and no
others, namely:
a. Where the mortgagor binds himself to repay the same;
b. Where, by any cause other than the wrongful act or default of the mortgagor, or
mortgagee, the mortgaged property is wholly or partially destroyed or the security
is rendered insufficient within the meaning of section 66, and the mortgagee has
given the mortgagor a reasonable opportunity of providing further security
enough to render the whole security sufficient, and the mortgagor has failed to do
so;
c. Where the mortgagee is deprived of the whole or part of his security
by or in consequence of the wrongful act or default of the mortgagor;
d. Where the mortgagee being entitled to possession of the mortgaged
Property, the mortgagor fails to deliver the same to him, or to secure the
Possession thereof to him without disturbance by the mortgagor or any person claiming
under a title superior to that of the mortgagor;
Provided that, in the case referred to in clause (a), a transferee from the mortgagor from
his legal representative shall not be liable to be sued for the mortgage money.
III. Right of power of sale of mortgaged property, if any
Section 69(1), Transfer of Property Act provides that the mortgagee, or any person acting
on his behalf, subject to the provision of this section, have power to sell or concur in
selling the mortgaged property, or any part thereof in default of payment of the mortgage
money, without the intervention of the Court, in the following cases and in no others,
namely:
a. Where the mortgage is an English mortgage, and neither the mortgagor nor the
mortgagee is a Hindu, Mohammedan or 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
conferrred on the mortgagee by the mortgage deed, and the mortgaged property or
any part thereof, was on the date of the execution of the mortgage deed, situate
within the towns of Calcutta, Madras, Bombay, or in any other town or area
which the State Government may by notification in the Official Gazette, specify
in this behalf.
No such power shall be exercised unless and until
a. notice in writing requiring payment of the principal money has been served on the
mortgagor, or on one of several mortgagors, and default has been made in
payment of the principal money or of part therof, for three months after such
service or;
b. some interest under the mortgage amounting at least to five hundred rupees, is in
arrear and unpaid for three months after becoming due.
IV. Right to appoint a receiver
Section 69A, Transfer of Property Act provides that a mortgagee having the right to
exercise a power of sale under section 69 shall, subject to the provisions of sub-section
(2), be entitled to appoint by writing signed by him or on his behalf, a receiver of the
income of the mortgaged property or any part thereof.
V. Right to 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.
VI. Right to the benefit of the renewed lease
Where 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.
VII. Right of mortgagee in possession
A mortgagee may spend such money as is necessary.
a. for the preservation of the mortgaged property from destruction, forfeiture or sale;
b. for supporting the mortgagor’s title to the property;
c. for making his own title thereto good against the mortgagor; and
d. when the mortgaged property is a renewable leasehold, for the renewal of the
lease,
And may, in the absence of a contract to the contrary, add such money to the principal
money at the rate of interest payable on the principal, and, where no such rate is fixed, at
the rate of nine percent per annum:
VIII. Liabilities of mortgagee in possession
Section 76, Transfer of property Act provides that when, during the continuance of the
mortgage, the mortgagee takes possession of the mortgaged property:
a. he must manage the property as a person of ordinary prudence would manage it if
it were his own;
b. he must use his best endeavors to collect the rents and profits thereof;
c. he must, in the absence of a contract to the contrary, out of the income to the
property, pay the Government revenue, all other charges of a public nature and all
rent accruing due in respect thereof during such possession, and any arrears of
rent in default of payment of which the property may be summarily sold;
d. he must, in the absence of a contract to the contrary, make such necessary repairs
of the property as he can pay for out of the rent and profits thereof after deduction
from such rents and profits the payments mentioned in clause (c) and the interest
on the principal money;
e. he must not commit any act which is destructive or permanently injurious to the
property;
f. where he has insured the whole or any part of the property against loss or damage
by fire, he must, in case of such loss or damage, apply any money which he
actually receives under the policy, or so much thereof as may be necessary in reinstating
the property, or, if the mortgagor so directs, in reduction of discharge of
the mortgage money;
g. he must keep clear, full and accurate accounts of all sums received and spent by
him as mortgagee, and, at any time during the continuance of the mortgage, give
the mortgagor, at his request and cost, true copies of such accounts and of the
vouchers by which they are supported;
h. his receipts from the mortgaged property, or, where such property is personally
occupied by him, a fair occupation rent in respect thereof, shall after deducting
the expenses properly incurred for the management of the property and the
collection of rents and profits and the other expenses mentioned in clauses (c) and
(d) and interest thereon, be debited against him in reduction of the amount (if
any), from time to time due to him on account of interest and , so far as such
receipts exceed any interest due, in reduction or discharge of the mortgage
money; the surplus, if any, shall be paid to the mortgagor;
i. when the mortgagor tenders or deposits in a manner hereinafter provided, the
amount for the time being due to on the mortgage, the mortgagee must,
notwithstanding the provisions in the other clauses of this section, account for his
receipts from the mortgaged property from the date of the tender, or from the
earliest time when he could take such amount out of the Court, as the case may
be, and shall not be entitled to deduct any amount therefrom on account of any
expenses incurred after such date or time in connection with the mortgaged
property.
IX. Loss occasioned by his default
If the mortgagee fails to perform any of the duties imposed upon him by this section, he
may, when accounts are taken in pursuance of a decree made under this Chapter, be
debited with the loss, if any, occasioned by such failure.
X. Liability to bring one suit on several mortgages
Section 67A, Transfer of Property Act provides that a mortgagee who holds two or more
mortgages executed by the same mortgagor in respect of each of which he has a right to
obtain the same kind of decree under section 67 and who sues to obtain such decree on
any one of the mortgages, shall, in the absence of a contract to the contrary, be bound to
sue on all the mortgages in respect of which the mortgage money has become due.
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