MORTGAGES (SECTIONS 58–59A)

1. Definition and Nature of Mortgage (Section 58a)

Under Section 58(a) of the Transfer of Property Act, 1882, a mortgage is defined as 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.
 The performance of an engagement which may give rise to a pecuniary (monetary) liability.

The Nature of a Mortgage

The essence of a mortgage lies in the transfer of a limited interest rather than absolute ownership. While
a sale transfers all rights (ownership) to the purchaser, a mortgage only transfers a specific right—such as
the right to sell the property or the right to possess it—while the ownership remains with the mortgagor.

The classic definition provided in Santley vs. Wilde (1899) describes it as a conveyance of land (or
assignment of chattels) as security for the payment of a debt or discharge of an obligation.

Essential Elements of a Mortgage

To constitute a valid mortgage, the following three elements must be present:

1. Transfer of an Interest: The transaction must involve the transfer of a limited interest in the property,
often referred to in legal instruments as a "clause of hypothecation".
2. Specific Immovable Property: The property must be identifiable. In Dakkata vs. Sasanapuri, the
court held that a mortgage is valid if the description is sufficient to identify the property, even if
exact boundaries are not specified.
3. Consideration: The transfer must be supported by consideration, which can be a loan (advanced or
future), an existing debt, or a performance resulting in pecuniary liability. Notably, the case of
Somedullah vs. Mahmud Ali established that mere inadequacy of consideration is not a ground to
treat a document as something other than a mortgage.

Key Terminology

 Mortgagor: The transferor/debtor who gives the security.

 Mortgagee: The transferee/creditor to whom the interest is transferred.
 Mortgage-money: The principal amount and interest for which the payment is secured.
 Mortgage-deed: The legal instrument/document through which the transfer of interest is effected.

2. The Six Kinds of Mortgages (Section 58b–g)

A simple mortgage, defined under Section 58(b) of the Transfer of Property Act, 1882, is a transaction
where the mortgagor does not deliver possession of the property but binds himself personally to pay the
debt. It is one of the most common forms of security for a loan.

1. Core Elements of a Simple Mortgage

a simple mortgage consists of the following essential characteristics:

 Personal Obligation: The mortgagor binds himself personally to pay the mortgage money.
 No Delivery of Possession: Unlike a usufructuary mortgage, the mortgagor retains possession of the
mortgaged property.
 Right of Sale: The parties agree, expressly or impliedly, that if the mortgagor fails to pay according to
the contract, the mortgagee has the right to cause the property to be sold to recover the debt.

2. Mortgagee’s Remedies

In a simple mortgage, the mortgagee has a two-fold remedy for recovering the debt:

 Right of Judicial Sale: The mortgagee can move the court to have the property sold and the
proceeds applied toward the payment of the mortgage money.
 Personal Decree: Because the mortgagor is personally bound, the mortgagee can obtain a money
decree that may be executed against any other assets of the mortgagor if the sale of the property is
insufficient to cover the debt.
 No Foreclosure: It is crucial to note that there is no right of foreclosure in a simple mortgage;
the mortgagee’s only right regarding the property itself is to have it sold.

3. Formalities and Registration (Section 59)

The sources emphasize strict registration requirements for this type of mortgage:

 Mandatory Registration: Under Section 59, a simple mortgage must always be effected by a
registered instrument, regardless of the amount of the principal money secured.
 Reasoning: Even if the amount is less than 100 Taka/Rupees, registration remains mandatory
because delivery of possession—which is an alternative for other mortgages under 100—cannot
take place in a simple mortgage.
 Execution: The mortgage deed must be signed by the mortgagor and attested by at least two
witnesses.

B. Mortgage by Conditional Sale (Section 58c)

A mortgage by conditional sale, defined under Section 58(c) of the Transfer of Property Act (TPA) 1882,
is a transaction where the mortgagor ostensibly sells the mortgaged property to the mortgagee subject to
specific conditions. This type of mortgage is historically related to the Muslim law transaction known as
Bai-bil-wafa.

1. Essential Elements

According to the sources, three primary elements must coexist for a transaction to be classified as a
mortgage by conditional sale:

 Ostensible Sale: The mortgagor appears to sell the immovable property to the mortgagee, but the sale
is not absolute.
 Specific Conditions: The "sale" is subject to one of the following conditions:
1. On default of payment of the mortgage-money by a certain date, the sale shall become absolute.
2. On payment being made, the sale shall become void.
3. On payment being made, the buyer (mortgagee) shall re-transfer the property to the seller
(mortgagor).
 Single Document Rule: A critical proviso added by the Amendment Act of 1929 mandates that the
condition for re-transfer or the voiding of the sale must be embodied in the same document that
effects or purports to effect the sale. If the condition is in a separate document, the transaction is
treated as a regular sale with a condition to repurchase rather than a mortgage.

2. Determining Factors (Tests)

In the case of Ganu Mia vs. Abdul Jabbar, the court laid down several non-exhaustive tests to distinguish
this mortgage from an out-and-out sale:
 The existence of a debt between the parties.
 The period of repayment (a long period typically indicates a mortgage, while a short period may
indicate a sale).
 Whether the grantor remains in possession of the property.
 A stipulation for the payment of interest.
 Whether the price is significantly below the true market value of the property.

3. Remedies and Rights

 Remedy of Foreclosure: The only legal remedy available to a mortgagee by conditional sale is
foreclosure. Under Section 67, the mortgagee can move the court for a decree that the mortgagor be
"absolutely debarred" from redeeming the property once the payment deadline has passed and the sale
becomes absolute.
 Right of Redemption: Like other mortgages, the mortgagor has the right to redeem (buy back) the
property by paying the debt before a final decree of foreclosure is passed.
 No Personal Liability: Unlike a simple or English mortgage, in a mortgage by conditional sale, there
is no personal liability for the mortgagor to pay the debt.

4. Key Case Laws

 Chandra Kanta Howladar vs. Rama Prasanna Ganguly: Discussed the core definition and the
concept of ostensible sale.
 Venkatasami vs. Subramanya: Confirmed that foreclosure is the only remedy for this type of
mortgage.
 Abdul Hafiz Choudhury vs. Aziz-ur-Rehman Badiuz: Highlighted that the absence of a
condition in the same document indicates an out-and-out sale rather than a mortgage.

C. Usufructuary Mortgage (Section 58d)

A usufructuary mortgage, defined under Section 58(d) of the Transfer of Property Act (TPA) 1882, is a
transaction where the mortgagor delivers possession of the property to the mortgagee to secure a debt. The
term "usufruct" refers to the "fruits" of the property, such as the rents and profits it generates.

1. Essential Elements

The following characteristics define a usufructuary mortgage:

 Delivery of Possession: The mortgagor delivers possession or binds himself to deliver possession of
the mortgaged property to the mortgagee. Following the Amendment Act of 1929, a mortgage is still
considered usufructuary even if possession is not actually delivered, provided the mortgagor has bound
himself to do so.
 Retention of Possession: The mortgagee is authorised to retain possession until the mortgage money
(the debt) is fully paid.
 Right to Rents and Profits: The mortgagee is authorised to receive the rents and profits accruing
from the property.
 Application of Income: These rents and profits are applied in lieu of interest, in payment of the
principal sum, or both.
 No Personal Liability: A key feature is that the mortgagor incurs no personal liability to repay the
loan; the debt is satisfied through the property’s income.
 No Fixed Time: Generally, there is no fixed time for repayment in a pure usufructuary mortgage, as
the mortgagee remains in possession until the debt is satisfied from the profits.

2. Rights and Remedies

 No Right of Sale or Foreclosure: A usufructuary mortgagee cannot sue for the sale of the property
nor can they seek foreclosure to bar the mortgagor's right of redemption.
 Mortgagee’s Only Remedy: The mortgagee’s sole remedy is to remain in possession of the property
and enjoy its usufruct until the debt is cleared.
 Mortgagor's Right to Recover Possession: The mortgagor has a right to recover possession of the
property once the debt is paid off from the rents and profits.

4. Key Case Laws

 Tajjo Bibi vs. Bhagwan Prasad: This case involved a suit for the possession of land held under a
usufructuary mortgage, where the court noted that the TPA defines and amends laws relating to
property transfers rather than introducing new principles.

D. English Mortgage (Section 58e)

 Definition: The mortgagor binds himself to repay on a certain date and transfers the property
absolutely to the mortgagee.
 Proviso: The transfer is subject to a condition that the mortgagee will re-transfer the property upon
payment.
 Remedy: The only remedy is sale.
 Note: Often involves double stamp duty (for transfer and re-transfer), making it least practiced.

D. Mortgage by Deposit of Title-Deeds (Equitable Mortgage) (Section 58f)

Mortgage by deposit of title deeds, defined under Section 58(f) of the Transfer of Property Act (TPA)
1882, is commonly known as an Equitable Mortgage. It is a transaction where a person delivers
documents of title to immovable property to a creditor or their agent with the specific intent to create a
security for a debt.

1. Essential Elements

According to the sources, the following requirements must be met to create a valid mortgage by deposit of
title deeds:

 Existence of a Debt: There must be an existing or future debt or advances made to be secured by
the property.
 Delivery of Title Deeds: The mortgagor must deliver the original documents of title (property
papers) to the creditor.
 Intent to Create Security: The delivery must be made with the clear intention of using the
property as security for the debt.
 Territorial Restriction: This type of mortgage can only be created by delivering the deeds in
specified towns. In Bangladesh, these towns include Dhaka, Narayanganj, and Chittagong.
 Rural Property Extension: A valid mortgage can be created even if the property is situated in a
rural area, provided the delivery of the title deeds themselves takes place within one of the
specified towns.

2. Formalities and Registration

A unique feature of this mortgage is its lack of formal requirements:

 No Registration or Writing Required: Unlike other mortgages, a mortgage by deposit of title

deeds does not require a written instrument or registration to be legally valid. It can be
effected orally.
 Memorandum Exception: If the parties choose to create a written memorandum that contains the
actual contract terms or bargains of the mortgage (rather than just acting as evidence of the
transaction), that memorandum may require registration under Section 17 of the Registration Act.

3. Rights and Remedies

  Same Footing as Simple Mortgage: Under Section 96, a mortgage by deposit of title deeds is
placed on the same legal footing as a simple mortgage.
 Suit for Sale: The primary remedy for the mortgagee if the debt is not paid is a suit for the sale of
the property.
 No Right of Foreclosure: The mortgagee is not entitled to sue for foreclosure to bar the
mortgagor's right of redemption.
 Redemption: The mortgagor’s remedy for recovering their deeds after paying the debt is a suit
for redemption, not a direct action to recover the deeds themselves.

F. Anomalous Mortgage (Section 58g)

 Definition: A mortgage that does not fall into any of the above five classes.
 Example: A Usufructuary mortgage where the mortgagor also binds himself personally to pay
(Simple + Usufructuary).

3. Mode of Transfer and Registration (Section 59)

Section 59 prescribes the legal formalities for creating a valid mortgage based on the principal money
secured:

Principal Amount Formalities Required

100 Taka/Rupees or Registered instrument signed by the mortgagor and attested by at least two
Upwards witnesses.
Less than 100 Taka/Rupees (i) Registered instrument (signed/attested) OR (ii) Delivery of possession.

Critical Exceptions:

1. Simple Mortgage: Regardless of the amount (even if less than 100), it must be registered
because no possession is delivered.
2. Deposit of Title-Deeds: Registration is not necessary, and it can be made in specified towns
without formalities.

Rules on Attestation:

 The witness must see the executant sign or receive personal acknowledgment.
 Kumar Harish Chandra vs. Bansidhar Mohanty: A person interested in the transaction (like a
money-lender) can still be a competent witness as long as they are not a party to the deed.
 M.N. Abdul Jabbar vs. H. Venkata Sastri & Sons: Attesting witnesses must sign animus
attestandi (with the intent to attest).

4. Successors in Interest (Section 59A)

References to "mortgagors" and "mortgagees" include persons who derive title from them (e.g., heirs,
executors, administrators, and assignees). Unless the contract says otherwise, these successors are bound The
cases related to Section 58 of the Transfer of Property Act, 1882, are primarily found in Chapter 18 of the
textbook sources and discussed in the corresponding video lectures. These cases help define the nature of
mortgages and distinguish between the various types.

1. General Definition and Nature of Mortgage (Section 58a)

 ***Santley vs. Wilde (1899)***: This landmark case provides the classic definition of a mortgage as a
conveyance of land or an assignment of chattels as security for the payment of a debt or the discharge of
another obligation.
 Gopal vs. Parsottam: Justice Mahmood observed that the legal definition of a mortgage in Section 58 is
the best-defined version for the country’s legal context.
 Dakkata vs. Sasanapuri: The court held that a mortgage is valid as long as the description of the
property is sufficient to identify it, even if specific boundaries are not mentioned.
 Somedullah vs. Mahmud Ali: This case established that mere inadequacy of consideration is not a
sufficient ground to treat a document as something other than a mortgage.

2. Mortgage by Conditional Sale (Section 58c)

 Chandra Kanta Howladar vs. Rama Prasanna Ganguly: Discusses the definition and elements that
constitute an ostensible sale under this category.
 Ganu Mia vs. Abdul Jabbar: The court provided specific tests (such as the existence of debt and the
period of repayment) to distinguish between a mortgage by conditional sale and a regular sale with a
condition to repurchase.
 Venkatasami vs. Subramanya: Confirmed that in a mortgage by conditional sale, the mortgagee’s only
legal remedy is foreclosure, which bars the mortgagor from redeeming the property.
 Abdul Hafiz Choudhury vs. Aziz-ur-Rehman Badiuz: Explains that if a condition of repurchase is not
embodied in the same document as the sale, the transaction is an out-and-out sale rather than a mortgage.

3. English Mortgage (Section 58e)

 Ram Kinkar Banerjee vs. Satya Charan Srimani: The court interpreted Section 58(e), clarifying that an
English mortgage involves an absolute transfer of property with a proviso for re-transfer upon repayment
of the debt.

4. Mortgage by Deposit of Title-Deeds (Equitable Mortgage) (Section 58f)

 Verdu Seth Sam vs. Luckputty: This early decision recognized the validity of equitable mortgages
(created by depositing documents of title) in the legal system.
 Agrani Bank Ltd. vs. Habib Oil Mills (Bangladesh) Ltd: This case highlights the territorial restrictions
of Section 58(f), noting that such mortgages can only be created by delivering title deeds in specified towns
like Dhaka, Narayanganj, and Chittagong.
 Ayat Steels Limited vs. Mohammad Ali: The court held that a valid mortgage can be created by
delivering title deeds in a specified town even if the property itself is situated in a rural area.