Simple Mortgage
Simple Mortgage
1. Statutory Definition
Defined under Section 58(b), Transfer of Property Act, 1882:
Where, without delivering possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage-money, and agrees that in the event of his failure to pay, the mortgagee shall have a right to cause the property to be sold and the proceeds applied towards the mortgage debt.
2. Essential Features
No delivery of possession – The mortgagor continues to remain in possession of the property.
Personal covenant – The mortgagor personally undertakes to repay the mortgage money.
Right of sale – The mortgagee acquires the right, in case of default, to cause the property to be sold through the intervention of the court.
Creation of an interest – A charge is created over the property in favour of the mortgagee.
Title deeds may or may not be delivered – Unlike equitable mortgage, delivery of deeds is not essential.
3. Rights of Mortgagor
Right to Redeem (Section 60, TPA): Mortgagor has the right to redeem his property after repayment. This is known as the equity of redemption.
Right to Accretions: If the property increases in value or receives some benefit, mortgagor is entitled to it.
Right to Improvements: Mortgagor enjoys any improvements made to the property.
4. Rights of Mortgagee
Right to sue for mortgage money (Section 68, TPA): Because a personal covenant exists, the mortgagee can sue the mortgagor for repayment.
Right to sale of property (Section 67, TPA): The mortgagee can get a decree for sale of the mortgaged property.
Right to possession? No, mortgagee does not get possession in simple mortgage.
5. Remedies
Suit for mortgage money (personal action).
Suit for sale of mortgaged property.
Unlike a mortgage by conditional sale, foreclosure is generally not available in a simple mortgage.
6. Important Case Laws
Tagore v. Tagore (1872, Privy Council): Though not about simple mortgage directly, it laid the principle that interests in property must be recognised by law. In a simple mortgage, only rights recognised by statute (personal covenant + right of sale) are allowed.
Narandas Karsondas v. S.A. Kamtam (1977, SC): The Supreme Court held that a mortgagee’s rights under a simple mortgage are limited to enforcing the security by sale and not by taking possession.
Dattatreya Shankar Mote v. Anand Chintaman Datar (SC, 1974): Explained the priority of charges and clarified how simple mortgages interact with subsequent encumbrances.
Harbans v. Om Prakash (SC): Reaffirmed that the right of redemption is fundamental; once a mortgage always remains a mortgage — the mortgagor’s equity of redemption cannot be taken away.
Rambaran Prasad v. Ram Mohit Hazra (SC, 1967): Distinguished between contractual rights and proprietary interests, clarifying how enforcement of simple mortgage rights must proceed through court.
7. Illustration
A borrows ₹10 lakhs from B. A executes a deed saying:
He will repay in 5 years,
If he defaults, B can cause the property to be sold.
A does not hand over possession.
This is a Simple Mortgage.
If A defaults, B can (i) sue A for the money, or (ii) apply to the court to sell the mortgaged property.
8. Distinction from Other Mortgages
Usufructuary Mortgage: Mortgagee gets possession and enjoys rents/profits — not so in simple mortgage.
English Mortgage: Mortgagor transfers property absolutely with condition of retransfer — simple mortgage is only a charge.
Mortgage by Conditional Sale: Remedy is foreclosure — in simple mortgage, remedy is sale.
9. Exam Key Takeaways
Always start with Section 58(b) TPA definition.
Highlight no possession, personal covenant, right of sale.
Mention remedies (suit for money/sale, no foreclosure).
Cite Narandas Karsondas (1977) for no possession, Harbans case for equity of redemption, Dattatreya case for priority.
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