A piece of advice on mortgage of immovable property: A has mortgaged his immovable property to M for securing repayment of certain dues. The Mortgage is a Simple Mortgage. The Mortgagor being in sole and exclusive physical possession of the property is desirous of leasing it to L for a certain duration. This lease will fetch income to A in terms of periodical rent and also a lump sum receipt as a premium to be charged. A seeks your advice pertaining to such a proposed lease. How do you advise him about the same?

Transfer of Property Act gives the Mortgagor a power to lease the mortgaged property only if the Mortgagor is in lawful possession of the mortgaged property and if such a lease would be in the ordinary course of the management of the property which has to be in accordance with any of the local law, custom or usage. Mortgagor not in lawful possession of the mortgaged property has no power to lease. If the Mortgage Deed contains an express intention to the contrary, Mortgagor despite being in possession has also no power to lease. Moreover, such a lease has to be within the limitations contained in Section 65A of the Transfer of Property Act. These limitations are:-

  1. while such a lease shall reserve the best rent that could be reasonably obtained, it will not contain any provision for any premium to be paid or promised to be paid for any rent to be payable in advance;
  2. it will not provide for any renewal;
  3. any such lease would have to commence not later than six months from the date of the lease;
  4. in case when the lease is of a building, whether or not the same is leased with the land on which it stands, the duration of the lease shall not be more than 3 years, which will also provide for reentry on the rent not being paid within the specified period.

It is to be noted that the statutory restrictions and limitations stated above can be varied or extended by the Mortgage Deed itself.

If the Mortgagor is ready and willing to pay the Mortgage dues on the due date, but the Mortgagee illegally and wrongfully refuses to accept the same, what is the remedy for the Mortgagor?

We have seen that the right to redeem arises when the Mortgage debt becomes due and payable. Premature payment is ineffectual. Right to redeem therefore coincides the obligation to repay the mortgage debt. This right to redeem which commences on the mortgage debt becoming due and payable extinguishes when the suit for redemption is barred. Under Article 61 of the Limitation Act, right to redeem subsists and a suit therefore can be filed within 30 years from the day the right to redeem (or the right to recover possession which is appurtenant to the right of redemption) accrues.

Law therefore provides that at any time after principal money payable under the mortgage has become due and before a suit of redemption is barred, the Mortgagor may deposit in any court in which a suit for redemption could to be filed, the amount due under the mortgage. This money deposited in the Court will be to be account of the Mortgage. This right to make a deposit is not confined only to the Mortgagor but it extends also to the other persons who are entitled to redeem or institute a suit for redemption of mortgage. These other persons are listed in Section 91 of the Transfer of Property Act, as stated here in above.



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