TABLE OF CONTENTS:

1. A Mortgagee is Bound to Bring One Suit on Several Mortgages When Right to Sue for
Mortgage-money
1.1 Section-68 Right to sue for mortgage-money
1.2 Personal Liability of the Mortgagor.
1.3 Limitation Period
1.4 Personal Liability not Enforceable against Purchaser from Mortgagor.
1.5 Liability not effected for want of Registration.
1.6 Accidental Destruction of Security.
1.7 Destruction of Property by Wrongful Act of Mortgagor.
1.8 Failure of the Mortgagor to Deliver Possession.
1.9 Dispossession by a Person Other than Mortgagor
1.10 Dispossession due to Mortgagee’s Default.
1.11 Claim for Interest and Damages.
1.12 Discretion of Court.

1.1.12.1 Stay of Suit

2. Accession to Mortgaged Property(Sec-70).

SECTION-68: RIGHT TO SUE FOR MORTGAGE-MONEY

The mortgagee has a right to sue for the mortgage-money in the following cases and no others

(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 s. 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 or from his
legal representative shall not be liable to be sued for the mortgage-money.

(2) Where a suit is brought under clause (a) or clause (b) of sub-section (1), the court may, at its
discretion, stay the suit and all proceedings therein, not withstanding any contract to the contrary,
until the mortgagee has exhausted all his available remedies against the mortgaged property or
what remains of it, unless the mortgagee abandons his security and, if necessary, re-transfers the
mortgaged property.

RIGHT TO SUE FOR MORTGAGE-MONEY:

The mortgagee has a right to sue for the mortgage-money only

i) Where the mortgagor binds himself to repay the same1 (or)

1
Provided that a transferee from the mortgagor or from his legal representative shall not be liable to be sued for the
mortgage-money.
ii) 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

(iii) The security is rendered insufficient, and

(iv)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. Or

(v) 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. (or)

(vi) Where the mortgagee being entitled to possession of the mortgaged property, the mortgagor
fails to deliver the same to him. (or)

(vii) 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.

The provisions are of an enabling nature and do not preclude the mortgagee from suing a
trespasser who has possession2. To attract this rule, it is necessary that the suit should be for
recovery of mortgage money and the suit must be by a mortgagee against the mortgagor for the
mortgage money, on the basis of the mortgagor's personal covenant3.

Where, after finding that the mortgagor has no title to one of the properties mortgaged, the
mortgagee leases it back to the mortgagor; recovers possession of the other properties, and
continues in possession, he acquiesces in the diminution of the security and cannot sue for the
mortgage money under this rule.4

Personal Liability of the Mortgagor:

Where the mortgagor binds himself personally to repay the debt, it becomes a personal covenant,
but where it is only his property that is kept as a security, the mortgagee cannot sue him but can
proceed against the property. A loan involves a personal liability, express or implied only in a
simple mortgage,5 or in an English mortgage. Where the mortgagor binds himself to pay only out

2
A. Kumar v. Sanjoga (1953) ILR 32 Pat 903.
3
Pradeep Chand Lall v. Grind lays Bank Ltd., AIR 1987 Cal 157.
4
Pais v. Mapanna AIR 1956 Mad
5
Ram Narayan Singh v. Adhindra Nath, AIR 1916 PC 119.
of the property mortgaged or a particular fund, 6 there is no personal liability. The same rule
applies in case of mortgage by conditional sale7 or in a usufructuary mortgage,8 where it can be
created only by an expressed or clearly implied covenant.9

Whether the covenant binds the mortgagor or not is a matter of construction. Express
covenants take many forms. In case of an equitable mortgage, the mortgagor binds himself
personally to pay the mortgage money 10 and in an anomalous mortgage , the right of the
mortgagee to sue on a personal covenant is not affected by his right to enforce his right to
recover possession.11 A provision that the mortgagee can recover the interest for the first five
years in any way they like is a personal covenant, and would impose a personal obligation to
pay, on the mortgagor. Similarly, where by the terms of the deed, the mortgagee is to repay
himself the interest out of the rents and profits, but after the expiry of a certain period the
mortgagor is bound to pay the entire sum as it is a personal covenant, but a covenant giving an
option of repaying or expressing right of redemption is not a personal covenant. In a suit for
recovery of balance amount after adjusting sale proceeds from sale of mortgaged property, there
may be personal liability of mortgagor/surety/guarantor to pay mortgage money subject to Sec-
67 & 68.

Limitation Period:

If the mortgage money is on demand, the time for its payment runs from the date of the mortgage
bond, otherwise, it is three years and is to be calculated not from the date when the mortgage
money is payable, but from the date of deprivation.

Personal Liability not Enforceable against Purchaser from Mortgagor:

6
Narotam Das v. Sheo Parargash, (1884) ILR 10 Cal 740.
7
Balkishen v. Legge (1900) ILR 22All 149.
8
Gopalasami v. Amnachella (1892) ILR 15 Mad 304.
9
Pell v. Gregory AIR 1925 Cal 834 (FB).
10
Nityanand Ghose v. Rajpur Chhaya Bani Cinema Ltd., AIR 1953 Cal 208.
11
Har Kuar v. Udham Singh Singh, AIR 1939 Lah 164.
Personal covenants do not run with the land and a purchaser of the right of redemption is not
entitled to a personal decree but the mortgagor continues to be liable for the payment of the
mortgage debt after he has assigned the right of redemption, but if he is sued for payment, he
acquires a new right to redeem. The assignee is liable only by entering into a fresh covenant with
the mortgagee. Similarly, a purchaser of a portion of the mortgaged property who retains a part
of the sale consideration agreeing to pay it towards the discharge of the mortgage debt is not
liable personally to the mortgagee12. There is, however, an implied covenant by the purchaser of
the right of redemption to indemnify the mortgagor. No personal liability can exist where there is
no privity of contract as between the first and second mortgages even in respect of money left
with the latter to pay the debt of the former13.

Liability not effected for want of Registration:

Personal liability is not affected for want of registration14 or of attestation, not even where it is
illegal.

Accidental Destruction of Security:

When the security is destructed by diluvion or by fire the mortgagee is entitled to sue for the
debt. Similarly, if the mortgaged property is acquired under the Land Acquisition Act or a
mortgagee in possession as lessee of the mortgagee gets his rent reduced by the Revenue court
the mortgagee can file a suit for his debt. He can also put up a similar claim it the property is
substantially reduced by acts like the removal and sale of the roofing of a factory which
materially affects the security or sale of the mortgaged property in execution by a prior
mortgagee or under the provisions of the Evacuee Property Act, 1950. It is open to the mortgagee
to relinquish his security and sue only on the personal covenant of the mortgagor to pay, but he
cannot, on receipt of some money from the assignee of the equity of redemption, give up the
security and sue the heirs of the mortgagor on the personal covenant. Before suing, he may
require the mortgagor to furnish another sufficient security and allow him a reasonable time for

12
Gajadhar Prasad v. Rishabhakumar, (1949) ILR Nag 122.
13
Babu Ram v. Dhan Singh AIR 1957 Punjab 169.
14
Krishna Swami v. Kamalamma, AIR 1941 PC 90.
that purpose. If the land is wholly or partially destroyed by diluvion, the mortgagee has a right to
sue for the mortgage money.

A compromise by the mortgagor with the person disputing his title cannot be regarded as a
wrongful act of default within the meaning of this rule

Destruction of Property by Wrongful Act of Mortgagor:

Where the mortgagee is deprived of his security wholly or in part by the wrongful act or default
of the mortgagor, his heirs or his transferees, the mortgagee may sue the mortgagor for the
mortgage money. This rule applies equally if there is no personal covenant or if the remedy
under the personal covenant is time-barred 15 . The mortgagee can also sue the mortgagor
personally in the following cases

(i) If the mortgagor does not pay off a prior encumbrance when it becomes due.

(ii) The mortgagor mortgages joint family property without authority16.

(iii) Where he does not disclose a prior mortgage.

(iv) When he knows that the property mortgaged is not transferable.

(v) If he commits waste.

(vi) Where the mortgaged property was allowed to fall in disrepair so as to diminish its letting
value, (or)

(vii) When the mortgagor sold the property by a registered deed to a vendor who has no notice of
the unregistered mortgage, and the mortgagee was deprived of his security.

Mere suspicion on part of the mortgage is not sufficient; and in cases where the
mortgagor included in the security property that was not his own, the remedy is by action for
deceit and not for a personal decree.

15
Singjee v. Tiruvengadam (1890) ILR 13 Mad 192.
16
Radha Churn v. Parbuttee Churn, (1876) 25 WR 51.
The default or wrongful act of the mortgagor must be anterior to the deprivation, and therefore,
the mortgagor is not liable if strangers later dispossess the mortgagee, but the mortgagee has no
remedy when he is deprived of his security by his own default.

A sale by the mortgagor of the right of redemption, whether voluntary or enforced by an

execution creditor, is not a wrongful act or a default.

Failure of the Mortgagor to Deliver Possession:

The mortgagor is bound to deliver possession to the usufructuary mortgagee17 or where he is

under a contract bound to do it, e.g., in an anomalous mortgage and to authorise the mortgagee to
continue in possession until payment of the mortgage money by means of a statutory right
irrespective of any express covenant. If the mortgage deed provided for a personal contract to
pay, the mortgagee can choose that or the mortgage money or for possession or may exercise this
remedy. A decision to proceed under this rule does not constitute an abandonment of the
mortgagee’s right to sue under the personal covenant, but it may amount to an election to sue for
the mortgage money, and therefore a waiver of the right to obtain possession. If he omits to sue
under this rule and the remedy is time barred, then, in absence of a personal covenant in the
usufructuary mortgage, the mortgagee has no other cause of action.

If the mortgagee fails to obtain possession from the mortgagor on the execution of the mortgage,
or during the term of the mortgage is dispossessed either by the mortgagor his co-sharer, by title
paramount, by a prior encumbrance, or, he himself purchases the property at a sale enforced by
that encumbrance, or for any other unjustified reason such as, the mortgagor being in possession
as the mortgagee’s lessee, wrongfully holds over, or where the mortgagor to whom the property
has been leased back by the mortgagee commits a breach of the conditions of the lease, the
mortgagee can file a suit to recover the debt. When the mortgagor gave two successive
usufructuary mortgages, or when the mortgagee could not get possession of some plots because
they did not belong to the mortgagor, or when the mortgagor deprived a usufructuary mortgagee

17
The rule is not applicable to a mortgage by conditional sale , Badri Das v. Besu, AIR 1933 Lah 174 and Kehar
Singh v. Jeon Singh AIR 1962 Punjab 465, nor can it be availed of by a charge-holder, in proceedings in execution
of a decree, without resorting to a suit, even if the security has been impaired by the conduct of the person creating
the charge.
of the rents and profits dispossessed from a part of the mortgaged property the mortgagee may
recover the debt by personal suit18. But a mortgagee of the undivided share of a coparcener is not
entitled to recover the mortgage money under the section.

Dispossession by a Person Other than Mortgagor:

If the mortgagee is dispossessed by a person other than the mortgagor such as a transferee of the
mortgagor, such transferee or a co-sharer may also be liable, and a usufructuary mortgagee so
dispossessed is entitled to recover the mortgage money. If dispossession is by a subsequent
simple mortgagee in execution of a decree in a suit brought by the latter and in which he was not
made a party, he can sue not merely for the recovery mortgage-money, but also for possession of
the mortgaged property.

If the mortgagee is dispossessed by a trespasser, he is entitled to sue him for possession, but
where after creating a mortgage with possession, the mortgagor obtains a lease of the property
from the mortgagee, where no period is fixed for the lease and the mortgagor then sells the
property and hands over possession to the third person, and the mortgagee cannot bring a suit for
possession against the transferee treating him as a trespasser.

Dispossession due to Mortgagee’s Default:

The mortgagee is not entitled to relief under this clause if he is dispossessed by his own default
and cannot repudiate the mortgage only because he is dispossessed of part of his security. But a
mortgagee can repudiate the mortgage if the dispossession is due to a neglect to pay the
government revenue resulting in sale of land for arrears of assessment, or omission to preserve
his security by defending a suit by a subsequent mortgagee, failure to file a suit for the recovery
of possession when his claim proceedings are disallowed, acquiescing in his dispossession, or
failure to enforce his remedy when he does not get possession of the whole of the property unless
there is an express stipulation to that effect.

18
The heirs of a mortgagee can sue on a cause of action accruing after death of the mortgagee without obtaing a
succession certificate, but not if the cause of action accrued in his lifetime in case of Umesh Chandra v. Mathura
Mohan (1901) ILR 28 Cal 246.
Claim for Interest and Damages:

A usufructuary mortgagee, who could not obtain possession owing to the fault of the mortgagor
or is dispossessed, is entitled to not only the payment of the debt but also interest, by way of
damages, for the unexpired period of the mortgage. But at the time of redemption he cannot
claim, by way of interest, the profits of the property which has not been delivered to him.

Discretion of the Court

Unless the mortgagee abandons his security19 and, if necessary, re-transfers mortgaged property,
the court may, at its discretion, stay the suit and all proceedings there in, notwithstanding any
contract to the contrary, until the mortgagee has exhausted all his available remedies against the
mortgaged property or what remains of it. The rule applies only to valid mortgages upon which a
suit could be filed in that court.

A suit under this rule is a suit by the mortgagee for the mortgage money. A usufructuary
mortgagee sues on title to recover possession, and in such a suit, no question as to the amount
due on the mortgage would arise. A usufructuary mortgagee has no remedy either by foreclosure
or by sale in case of dispossession and therefore he can only be given a simple money decree or
may also sue for possession20. A mortgagee who abandons his security is competent to bring a
simple suit for the money advanced by him, but a release of security is no bar to the sale of the
mortgaged property in execution of the decree. If the decree is for the mortgage money, he
cannot bring the mortgaged property to sale except in execution of the decree for costs.

Stay of Suit:

A suit under section 68 is a suit by the mortgagee for the mortgage-money. The only decree that
can be passed under this section is a decree for money. Therefore Order XXXIV, rule 6 of the
Code of Civil Procedure does not apply to the suits under Section 68. The mortgagee can,
therefore, execute his decree against the mortgagor personally while preserving his rights under

19
It implies the whole of the security, and does not apply if there is an abandonment of part of the security, and in
the case of the Chand Mall v. Ban Behari, AIR 1924 Cal 209, or Where the mortgagee has no security to abandon in
the case of Chunnilal v. Amir Ahmedi Bee AIR 1958 AP 608.
20
It is a supplemental right so that he can file a suit in the alternative for recovery of possession or for the mortgage
money in the case of Linga Reddi v. Sama Ran (1894) ILR 17 Mad 469. And also in the case of Arunachalam Chetti
v. Ayyavayyan, (1898) ILR 21 Mad 476.
the mortgage. This results in a great hardship to the mortgagor and to avoid this hardship the sub-
section (2) provides that where the mortgagor is not in default (clauses (a) and (b), the suit under
this section shall be stayed until the mortgagee has exhausted his remedy against the security.

In cases under clauses (a) and (b) the mortgagee should exhaust all his remedies available against
the mortgaged property before he seeks to pursue the personal remedy against the mortgagor.
However, such a restriction is not imposed under clauses (c) and (d). The court may, at its
discretion, stay all the suit and proceedings therein, Not with-standing the contract to the
contrary, until the mortgagee has exhausted all his available remedies against the mortgaged
property, unless the mortgagee abandons his security, and, wherever necessary, re-transfers the
property mortgaged.

CASES:

Case No.1:

Case Title: M. Ramanatha Pillai v K. V. Annamalai Chettiar and Another

Case Citation: AIR 1963 Mad 342

Brief Facts: In this case defendant has challenged an order which was against him in the trial
court and then he becomes an appellant. This case was regarding a suit out of which this appeal
arises was laid by the first respondent as plaintiff for recovery of Rs. 365 due under an “othi
deed”, dated 28th July 1943. This was executed by the appellant both on his own behalf and as
guardian of his elder brother's sons, defendants 2 and 3, who were minors on the date of the othi
deed. The sum claimed consisted of Rs. 200 principal and interest at 5 1/2 per cent, per annum
from the date of the mortgage deed. Contentions were raised as regards the validity and binding
character of the mortgage in regard to the share of defendants 2 and 3 and also on the question of
the mortgage being a real transaction. I am not concerned with these questions in this appeal.
But, a question of limitation was raised on the ground that since the mortgagee was entitled to
possession of the mortgaged property and such possession was not delivered the suit ought to
have been filed within twelve years from the date of the mortgage deed and not within twelve,
years from the date of the expiry of the three years period fixed in the mortgage deed for
repayment of the mortgage amount. Both the lower Courts have negative this contention. The
date of the mortgage deed, Ex. A.1, is 28th July 1943. The period fixed for repayment in the
mortgage deed is three years. It was alleged that the mortgaged property was leased back to the
mortgagor on the basis of a tenancy from year to year. But, at the end of the first year no rent
was paid, nor possession of the property surrendered. Both the lower Courts proceeded on the
assumption that this lease was not given effect to and consequently the mortgagee was not given
possession of the property.

ISSUES: The first was that the provisions of S. 68(1) (d) of this act cast an obligation upon the
mortgagee in this case to file a suit for the mortgage money within twelve years from the date of
default of the mortgagor to give possession and consequently; the suit would be barred by
limitation.

The second contention was that even if this provision in the Act is regarded as a provision for the
benefit of the mortgagee upon which she could base her cause of action as an alternative to the
cause of action based upon the covenant in the mortgage deed for repayment of the mortgage
money, still the original mortgagee in this case had exercised the option to avail herself of the
remedy provided under Section 68(1)(d) of the Act by the notice Ex. A.7, issued on 15th
September 1944 and consequently she was not entitled to rely on the personal covenant to bring
a suit within twelve years from the end of the three year period fixed in the mortgage deed for
payment. If this argument is correct and an election was made by the mortgagee on 15th
September 1944, the date of Ex. A. 7, the suit would be barred by time because it was admittedly
filed more than three years after the date of Ex. A. 7. The first respondent who filed the suit was
an assignee of the mortgage from the mortgagee.

ARGUMENTS: It was that the mortgagee cannot have two causes of action for the same claim
and where the statute gave a right to sue for money, it must prevail over the right contained in the
contract. This argument proceeds on the misconception that there are two separate causes of
action in this case for the same right or relief, viz., recovery of money due under the mortgage.
The nature of the right conferred under Sec. 68 (1) (d) if analysed would turn out to be nothing
but compensation to the mortgagee for the default of the mortgagor to surrender possession of
the mortgaged property. A statutory right is given to the mortgagee to claim the mortgage
amount in cases falling under S. 68 (1) (d) of the Act which is only in the nature of compensation
to the mortgagee and not an alternative remedy for recovery of the mortgage money based on the
right founded upon the personal covenant contained in the mortgage deed to repay the mortgage
money. It is true the amount recoverable by the mortgagee under S. 68 (1) (d) is identical in
quantity with the mortgage money mentioned in the mortgage deed. But, that would not affect
the nature of the claim dealt with in the statutory provision. Consequently, merely because the
amounts sued for in either case would be the same it could not be said that the cause of action is
the same though satisfaction for one cause of action would extinguish the other.

Really the cause of action under the mortgage deed is based upon contract while the cause of
action for the recovery of the amount of the mortgage claim money by virtue of the provisions of
S. 68 (1) (d) is in the nature of a right to claim compensation.

In cases of usufructuary mortgages containing a personal covenant by the mortgagor to pay the
mortgage money and default takes place in giving possession of the mortgaged property there is
only one cause of action or recovery of the mortgage money because in such a case S. 68 (1) (d)
would not be attracted if the suit is laid for the mortgage money after it becomes due according
to the tenor of the mortgage deed. There is therefore no force in the contention that in a case
where a mortgagee as here has both a cause of action based upon the personal covenant in the
mortgage deed and a right to recover the mortgage money by virtue of the provisions of S. 68 (1)
(d) of the Act, he gets two causes of action for the same claim.

Judgment: In this case this decision has any bearing on the question whether an option is
exercised by the mortgagee. The mere issue of a notice to the mortgagor, to pay the mortgage
money on the happening of the contingency contemplated under S. 68(1)(d) does not amount to
an unequivocal act or election to abandon the remedy based upon the cause of action contained
in the deed in preference to the remedy provided under Section 68(1)(d).

Mr. Natesan next referred to the fact that interest was claimed in the plaint from the date of the
mortgage deed and not from the date of notice Ex. A.7. I do not see how this has any bearing on
the question as to the starting point for the period of limitation though the right to claim interest
from the date of the mortgage may be doubted.

In my view a real election would arise in the case of a mortgagee electing to sue for the mortgage
money under the provisions of S. 68(1)(d) of the Act only as between two remedies, viz., suing
for recovery of possession of the mortgaged property and suit for recovery of the mortgage
money. In electing for the one and not for the other it could be well said that the mortgagee in
such a case had abandoned the other remedy. But, there is really no option or election in a case
like the present where the right to sue for the mortgage money is already secured by the
mortgage deed. An election involves the principle that one has to choose between two
inconsistent rights of remedies. There could therefore be no election in any legal sense in the
case of a mortgagee entitled to sue for the mortgage money both by reason of covenant in the
contract and the provisions of Section 68(1)(d) who chooses to enforce the covenant and not the
statutory right for getting payment. I therefore overrule this contention also. In the result, the
second appeal fails and is dismissed with costs. No leave.

CASE-II

CASE TITLE: Fatch Din and Others v Kishen Lal

CITATION: AIR 1923 ALL 584

BRIEF FACTS: This case is a perfect example for the suit in which a usufructuary mortgagee
sued for his mortgage-money on the ground of not having obtained possession of the full
property mortgaged to him.

ISSUES AND REASONING:

In the first place at the time of the mortgage it was stipulated that the mortgagors should pay Rs.
76 a year as interest on the mortgage-money. The mortgagors executed a simultaneous kabuliyat,
which was really part of the same transaction agreeing to rent the plots from the mortgagee at a
rent of Rs. 76. At the time of fixing rent by the Revenue Court they objected that Rs. 76 was in
excess of the rent which they were liable to pay as expropriator tenants, the plot mortgaged was
sir plot and rent was fixed at Rs. 27-4-7. The learned District Judge has held in favour of the
defendants-appellants on this point on the ground that the value of the security was not
diminished within the meaning of Section 68 by this transaction. We are unable to agree with the
learned District Judge on this point. The value of a property depends to a large extent upon the
income which is obtainable from it and property yielding an income of Rs. 27 a year is obviously
of much lesser value than property yielding an income of Rs. 76 a year.
The second point urged by the plaintiff was that certain plots had been inserted in the mortgage-
deed which did not belong to the mortgagors and of which the plaintiff was therefore unable to
obtain possession. The lower appellate Court finds this to have been the fact, and under Section
68 (c) of the Transfer of Property Act has given the plaintiff a decree for the mortgage-money. It
is contended in this Court that Section 63 (c) is not applicable on the ground that it is not proved
that the mortgagors deliberately inserted these plots in the deed knowing that they had no title to
them. This circumstance is however immaterial. Under Section 65 of the Transfer of Property
Act the mortgagor is deemed to contract that he has the ‘interest which he professes to have in
the mortgaged property, and further, under Section 68(c) of the Act whenever the mortgagor fails
to deliver possession of the property to the usufructuary mortgagee the latter is entitled to sue for
his mortgage-money.

HELD:

Basing upon the facts and issues and reasoning given by the concerned Hon’ble Judge therefore
the court finds in favour of the plaintiff. We accordingly uphold the decree of the Court below
and dismiss the appeal with costs including in this Court-fees on the higher scale.

SECTION-70: 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.

ILLUSTRATIONS:

A) A mortgages to B a certain field bordering on a river. The field is increased by alluvium.

For the purposes of his security, B is entitled to the increase.
B) B mortgages a certain plot of building land to A and afterwards erects a house on the plot.
For the purpose of his security, A is entitled to the house as well as the plot.

Section 70 deals with a mortgagee are right to accessions, and Section. 63 deals with the right of
the mortgagor to these accessions. Accessions as explained under notes to Section. 63 are
additions or improvements to the mortgaged property and are natural or acquired. Section 70
provides that if, after the date of a mortgage, an 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.

Natural accessions form part of the mortgagee’s security, and revert to the mortgagor upon
redemption. As regards acquired accessions, it would be a question of fact in each case. If the
mortgagor builds on the property mortgaged, the buildings form part of the mortgagee’s security
as an accession to the property.

Instances of accessions to which the mortgagee is entitled:

(i) Land formed by alluvion and dilluvion.

(ii) Machinery fixed by bolts and nuts to the concrete floor of a building.

(iii) An electric installation set up by the mortgagor in a mortgaged factory.

(iv) Removal of a shed and building a small house on the land mortgaged.

(v) Purchase of government trees standing on the mortgaged land.

(vi) An increase of interest or enlargement of the estate.

(vii) A puisne mortgagee acquiring an occupancy right by surrender from the mortgagor.

(viii) The increase in value of the estate when the mortgagor discharges a prior encumbrance
existing at the date of the mortgage.

(ix) A sub-mortgagee acquiring an equity of redemption.

(x) An increase in shares of mortgagor by death of coheirs in a Muslim family, or in a Hindu

coparcenaries.

(xi) Acquisition of freehold rights in property where originally the mortgagor had only lease hold
rights in it.

The following will not be termed as accessions benefiting the mortgagee:

(i) A mortgagee in possession encroaching upon the other land of the mortgage.
(ii) A mortgagee in possession encroaching upon the adjoining waste land.
(iii) A fresh grant of adjoining land.
(iv) Where only the building is mortgaged (and not the site), the site cannot be deemed to be
an accession to the mortgaged property.

If, after the mortgage, the mortgagor sells a plot of the land mortgaged to the mortgagee and
then buys it back, the plot is again subject to the mortgage.

CASE-I

CASE TITLE: Behari Lal Sen v Indra Narayan Bandopadya and Others

CITATION: AIR 1939 Mad 684

BRIEF FACTS: There were two brothers belonging to the Dayabhaga School. One brother died
leaving three sons, Behari Lal Sen, Defendant No. 1, Tarini Raman Sen, Defendant No. 2, and
Bepin Behari Sen. Bepin died leaving Bahuballav Sen, Defendant No. 3, and Defendants Nos. 5
and 6 who were minors. The other brother, when he died, left a widow who was Defendant No.
4, and the mortgage transaction was constituted by a registered mortgage bond executed by
Behari, Tarini and Bahuballav. That was a document dated the 24th June 1908 and the form of
the document is this: that various family properties (which included certain shares in properties)
were scheduled to the deed; that those three persons were the borrowers putting forward all the
family properties as belonging to them? It is stated that as security for the satisfaction of the said
amount, we mortgage the zamindary, putni and nishkar properties owned and possessed by us
and described in the schedule below.

ISSUES & REASONING: Namely the issues raised by the plaintiff on the defendant was that
firstly, The Subordinate Judge has found several things against the plaintiff, but the plaintiff has
not brought any cross-objection, and has not complained against those findings. He has found,
for example, that the purpose for which the bond was taken was not one of necessity, and that
therefore the other members of the family, who were no parties to the transaction, cannot have
their shares made answerable for the loan on the basis that the loan was obtained on their behalf
by the karta of the family. The appellant says that it is not right that upon his share in the
mortgaged property the whole of the mortgage debt should be visited, but that he should only be
made to pay a rateable part of the debt. The second point is this: After the suit had been
instituted Defendant No. 4 died and Defendant No. 1's share in the property which previously
was 1/6th became 5/12ths. He says that acquisition of interest (however it may be described),
this inheritance, which he obtained on the death of Defendant No. 4, was not comprised in the
mortgage and cannot be made answerable for the mortgage money.

It makes a good deal of difference to the rights of the mortgagee if subsequent to the mortgage
the various co-mortgagors have affected a portion of the mortgaged properties between
themselves. The mortgagee in the case of any particular mortgaged share would have to follow
the particular allotment that was made to the mortgagor out of the family property. The first
thing that one sees when one reads the pleadings and the issues in this case is that there was no
issue raised to the effect that the rights of the parties ought to be determined in view of a
partition subsequent to the mortgage deed. In the written statement originally filed by Defendant
No. 4 there was certain loose talk about people being and not being in joint mess. The Defendant
No. 1 has, however, filed a written statement of his own after the death of Defendant No. 4 and
it is impossible to discover from what is alleged in that written statement any intelligible case to
the effect that at such and such a date, after the mortgage bond, the parties made a partition of
their pro-parties by which the Defendant No. l's interest was limited to particular properties or
allotments. The issues framed contain no such question. When the Judge came to deal with the
case he did so on the basis that the Defendant No. 1 had still got a 5/12th interest in the
mortgaged property. Therefore, put any question of partition out of the case. Secondly the issue
was regarding to the additional share which came to Defendant No, 1 upon the death of his aunt
Defendant No. 4. For this court has given a reasoning stating that That is one principle. Another
principle to be borne in mind is the principle that any enlargement of the mortgagor's interest in
the mortgaged premises usually enures for the benefit of the mortgagee. We have to consider
whether the learned Judge has rightly he subjected to the mortgage the whole of the 5/12ths
interest. In my judgment has rightly done so. It appears to me that as between the mortgagor and
the mortgagee we have to remember first that by the mortgage deed itself the Defendant No. 1
claimed to be entitled to whatever interest was not vested in his brothers Tarini and Bahuballa v.
There is a representation on the part of each of these three persons that any interest which is not
in the other two is in him. But, apart from that, we must consider the principle which has been
applied to India on the authority of the Privy Council in the case of Raja Kishendatt Ram v. Raja
Mumtaz Ali Khan 1879 (5) ILR (Cal) 198, where it was held that English Law as regards this
matter is found in justice and may be applied to an Indian mortgage.

HELD: The court therefore thinks that that this appeal fails and must be dismissed with costs to
the plaintiff-respondent.

CASE-II:

CASE TITLE: Pachigolla Satyanarayanamurthy v Chevala Gangayya and Others

CITATION: AIR 1939 MAD 684

BRIEF FACTS: a suit for the recovery of money due under certain mortgages executed by
defendants 1 and 2 in favour of the plaintiff between June 1927 and June 1928 - Exs. A to D
series. Defendants 3, 5 and 7 are the contesting defendants and the dispute between the plaintiffs
and the defendants relates to the extent of the property comprised in the mortgages in plaintiff's
favour. The plaintiff's mortgages comprise properties described in three Schedules A, B and G.
Sch. A relates to certain house property with which we are not concerned. Sch. B refers to a tiled
building which was being constructed on a site belonging to Gangachalam and others and
purports to pass the walls, beams, door frames, etc. of the building. From the body of Ex. A it
will be seen that this site had been taken on lease for a period of 12 years for the purpose of
constructing a building thereon for a rice mill. Sch. C comprises an engine which is said to be
known by the name of Sree Kanakadurga Rice Mill and the various parts of the machinery
pertaining to the engine or to the huller which was then intended to be set up to work with the
help of the engine. The concluding words of Schedule C refer to all samans connected with the
rice mill and other samans necesssary to fit up the mill and the huller and all accessories. There
is also a clause to the effect that if the mill should be fitted up in some other place, the property
should nevertheless continue to be under the mortgage. It is admitted that for some time the
concern was working only as a huller. In the latter part of 1928, the mortgagors decided to work
as a Sheller also with the power derived from the engine. For purchasing the Sheller and for
incidental purposes, they borrowed moneys from defendants 3, 5 and 7 and certain others under
Exs. I and II in July and November 1928. In due course, the Sheller was also set up in the shed
that had already been con. strutted and defendant 3 admits in his deposition that the Sheller
system was fixed in the earth, that it was connected by a belt with the huller system and that
power from the same engine was used for working both the systems. It also appears from the
evidence that the Sheller system can be separated from the huller system merely by removing
the belt and that for accounts purposes, the two systems are kept distinct. On the above facts, the
question for determination is whether the plaintiff can claim that the machinery pertaining to the
Sheller system is also comprised in his security. The learned Subordinate Judge has held that it
is not. The plaintiff has appealed and contends that it should be held to be included in the
security.

ISSUES & REASONING: The plaintiff (Mr. Lakshmanna) has relied on Sec. 70, T. P. Act ,
and the decisions in (45) ILR(Cal) 653, (11) ILR(Rang) 322, (16) ILR(Lah) 881 and (53)
ILR(All) 334(4) It does not seem to us necessary for the purpose of this case to consider whether
and how far the rules of the English law governing fixtures are to be followed in this country. It
is sufficient to say that in respect of particular species of transfers, the Legislature has made
express provisions in the Transfer of Property Act , see for instance S. 8, and S. 108, cl. (h). We
are prepared to assume that in certain circumstances machinery existing in the mortgaged
premises on the date of the mortgage and even machinery subsequently installed there may pass
under a mortgage of the premises. But the question will, in our opinion have to be determined in
each case in the light of various facts. It may not be possible always to treat machinery brought
into a building as an “accession” within the meaning of Ss. 63 and 70, of the Act. It may in some
cases become necessary to consider how far the definition of the expression “attached to the
earth” in S. 3, of this Act , will bear upon the decision of this question. According to clause. (c)
of that definition, what is attached must be attached for the permanent beneficial enjoyment of
that to which it is attached.

JUDGMENT: In the present case we are of opinion that there is no scope for the application of
the rule relating to fixtures or of the principle enunciated in S. 70, of this Act , because we are
not satisfied that the site to which the Sheller system of machinery is said to be attached, is
comprised in the mortgages to the plaintiff. It also appears to us that on the construction of the
mortgage deeds, the machinery specified in Schedule. C was mortgaged not as part of or as
passing with the immovable property but independently and as moveable property. Schedule. B
to the mortgage deed refers only to the building that was then under construction; and while it
specifies in elaborate detail the various parts of the structure of the building, it significantly
omits to refer to the site. This does not seem to us an accidental omission; it is apparently
explained by the fact that the site itself was held by the mortgagor only for a term of 12 years.
That the machinery was dealt with independently of the building is also shown by the provision
at the end of Schedule. C that even if the machinery should be removed from this building and
be fitted up elsewhere, the machinery should nevertheless continue subject to the mortgage. If,
as we have held, the leasehold site is not comprised in the plaintiff's security, it would follow
that the Sheller system machinery would not become part of the security merely by its having
been subsequently fixed up on the site. Even if a different view should be taken as to the scope
of Schedule. B, we feel no doubt that the parties intended to deal with the machinery
independently of the building and only as moveable property. Reference is no doubt made in
Schedule. C to the mill and the arguments before us have been urged as if the word “mill” means
the whole premises including the machinery. But it is obvious from the way in which the
description is set out in Schedule. C that the documents use the word “mill” as referring only to
the engine and not as referring to the whole premises. The mere fact that the Sheller system is
connected by a belt with the pre-existing huller system or worked by power derived from the
pre-existing engine will not of itself suffice to bring the Sheller system within the security
created by Exs. A to D nor attract to the Sheller system the principles of the English law relating
to fixtures: see (1908) 62 S J 715. The appeal fails and is dismissed with costs of respondents 3,
5 and 7.