WHAT IS A MORTGAGE?

Section 58(a) of the Transfer of Property Act defines a mortgage as the transfer of an interest in
specific immovable property for securing the payment of money advanced, or to be advanced, by
way of loan, an existing or future debt, or the performance of an engagement, which may give
rise to a pecuniary liability.

The transferor is called a mortgagor, the transferee a mortgagee; the principal money and
interest of which payment is secured for the time being are called the mortgage-money and the
instrument (if any) by which the transfer is effected is called a mortgage-deed.

Mortgage as understood in India cannot be defined better than by the definition adopted by
Section 58 of the Transfer of Property Act.1

CLOGGING OF REDEMPTION

The clogging of redemption doctrine was developed by English equity courts to prevent
forfeitures by borrowers whose mortgage instruments contained clauses that indefeasibly vested
title to their property in the mortgagee, if payment of the indebtedness was even one day later
than required. This doctrine, which denied specific performance of such clauses, was a necessary
corollary to the very concept of an equity of redemption (the right in equity of a mortgagor in
default to buy back the property by paying the debt).Thus, agreements found in a mortgage
instrument or executed simulataneously with a mortgage, that sought to waive the mortgagor's
right to redeem or that had the equivalent effect, were uniformly held to be void in equity.2 The
right to redemption is protected under Section 60 of the TPA. In areas where the Act is not in
force, the right to redemption is equitable.3

1
Gopal v. Parsotam, (1883) ILR 5 All 121, 137.
2
Licht, Jeffrey L. (1986) "The Clog on the Equity of Redemption and its Effects on Modern Real Estate Finance," St.
John's Law Review: Vol. 60 : No. 3 , Article 3, available at
https://scholarship.law.stjohns.edu/lawreview/vol60/iss3/3
3
Murarilal v. Dev Karan, AIR 1965 SC 225
 DIFFERENCE BETWEEN ENGLISH MORTGAGE AND MORTGAGES BY CONDITIONAL SALE.

Where the mortgagor binds himself to repay the mortgage money on a certain date,4 and transfers
the mortgaged property absolutely to the mortgagee, but subject to a proviso that he will re-
transfer it to the mortgagor5 upon payment of the mortgaged money as agreed, the transaction is
called an English mortgage.6

Where the mortgagor ostensibly7 sells the mortgaged property on a condition that on default of
payment of the mortgage money on a certain date8 the sale will become absolute, or on a
condition that on such payment being made the sale shall become void, or on the condition that
on such payment being made the buyer shall transfer the property to the seller, the transaction is
called mortgage by conditional sale.9

Thus, in Mortgage by Conditional Sale, there is an ostensible sale in place where the mortgagor
is only left with the legal right of redemption. However, in an English Mortgage, there is no sale
and the mortgagor personally binds himself to pay the money. Before the payment date the
mortgagor has a legal interest in the land and after the date he has the legal right of redemption.10
This right of redemption remaining in the mortgagor is an estate in land.11

RECONCILING S. 58(C) WITH S. 58(A).

The question arises whether this requirement that the property should be transferred absolutely is
a mere matter of form, or is a matter of substance so that the whole of the interest of the
mortgagor must pass to the mortgagee. It is true that he word absolutely in the definition of an
English mortgage in clause (e) seems to be inconsistent with the general definition in clause (a)
that a mortgage is a transfer of an interest in the property. If a mortgage is a transfer of an
interest in property, it is not an absolute transfer.

4
Raja Janki Nath v. Syed Asad Raza, AIR 1936 Pat 211
5
Ram Kinkar v. Satya Charan, AIR 1939 PC 14
6
Cohen v. Baidyanath, AIR 1936 Cal 646
7
Mumtaz v. Mt Luchmi, AIR 1931 All 196
8
Padmanabha v. Sitarama, AIR 1928 Mad 28
9
Ali Ahmed v. Rahmatullah, (1892) ILR 14 All 195
10
Jagdamba Loan Co. Ltd. v. Raja Shiba Prasad, AIR 1941 PC 36
11
LallaKanhoolal v. Manki, (1901) 6 Cal WN 601
However, this inconsistency between clause (e) and clause (a) might be reconciled. The
definition of an English mortgage as given in the Transfer of Property Act s 58(e) must be read
subject to the definition of a mortgage as given in clause (a) of that section, and consequently, an
English mortgage in India can hardly be regarded as the transfer of the entire estate of the
mortgagor to the mortgagee. It is correct, however, not to regard what is left in the mortgage as
an equitable estate, but it is nevertheless some estate; an interest only in the estate having been
transferred under the mortgage. Therefore, it is not easy to say of an assignment by way of an
English mortgage in India executed by a lessee that the whole of the estate passes under the
mortgage to the mortgagee. This reasoning was laid down in Ram Kinkar Banerjee v. Satya
Charan.12

12
Ram Kinker Banerjee v. Satya Charan, 1938 SCC OnLine PC 64.