1) The document discusses different types of mortgages in India from the perspective of a lender. 2) It recommends mortgage by conditional sale, as it allows the lender to take possession of the mortgaged property if the borrower fails to repay the loan. This protects the lender's interests. 3) Under this type of mortgage, if repayment is not made by the specified date, the sale of the property to the lender becomes absolute, depriving the borrower of redeeming the property.

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Name: Abhinandan Rai
Regd. No. 1141845020
Course: BBA LLB
Contact no. 8984742925
Email id: abhinandan.BBALLB@gmail.com
QUESTION: If you are Acting For A Lender, Which form of mortgage would
you Recommend and Why?
If I am acting for a lender, I will of course recommend him the paramount
form of mortgage which will be advantageous beneficial and apt for my client.
My first and foremost duty towards my client is to recommend him a
mortgage where he gets the remedy to recuperate the debt, in case the mortgagor
fails to repay the mortgage money. Also from the earnings yield by lending
mortgage money from mortgagor how he will be benefited mostly and will be
immune from all possible losses.
Lender can be anyone who can use his funds to lend it to borrowers. In
India it was the usual practice that they mortgage their property to “Seths” and
“zamindars” to seek loans with a fixed installment for a defined tenure and after
the tenure was over they can absolutely use the property of the mortgagor. That
time there was no defined law so these mortgagors will have to pay hefty amount
of interest rate and couldn’t repay the amount so they will have to lose their
property. But after the Banking system started working properly people usually
mortgaged their properties to Banks apart from that the Mortgage Guarantee
Companies (MGCs) have been specified as Non Banking Financial Companies to
give Guarantee on Mortgage.

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If we will compare all the mortgages then we will find that in Simple
Mortgage1 the lender will not get the possession of the mortgaged property. In
Simple Mortgage the mortgagor binds himself personally to pay the mortgage
money. Here the right of the mortgagee is that if the mortgagor fails to repay the
loan within stipulated date, he is having only two remedies:
1) As the mortgagor takes personal obligation to repay the loan the
mortgagee can sue him for recovery of money. In this case he shall get
simply money decree.
2) The mortgagee may also move the court for sale of mortgage property.
Here he will get the decree for the sale of property.
Though this kind of practice commonly prevails in India but here my client will
have to bear loss of time and money to fight the in the court of law so I will never
recommend him to go for simple mortgage.
Second kind of Mortgage is Mortgage by Conditional sale2. This kind of
mortgage normally prevailed in Muslims as in Islam taking interest was “haram”
so they introduced “bye-bil-wafa” which is a conditional sale.
Here it is an ostensible sale of immovable property. But the sale is subject to the
following conditions:
1) On non-payment of mortgage money the sale would become absolute or,
2) On payment of mortgage money, the sale shall become void.
So I would highly recommend going for this mortgage because here you will have
the possession of the property and in the prescribed time if you will not pay the
1 Section 58 (b) of Transfer of Property Act, 1882
2 Section 58 (c) of Transfer of Property Act, 1882

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total money the lender can pressurize the mortgagor to sale the property in much
more lower price than the market price.
Third form of mortgage is Usufructuary Mortgage3. Here also the delivery of
possession of the mortgage property is applicable. But the beauty of this form of
mortgage is that the mortgagee can enjoy or use the property until his dues are paid
off. But here there is only one problem and that is the Mortgagee cannot foreclose
or sue for sale of the mortgage property. So if the immovable property is having no
commercial usage I mean if the mortgagor can’t use it for growing crops or renting
this or lease it out etc. then he have no option to go to the court and he will be
stuck as there is no time limit fixed in case of this kind of mortgages to repay the
whole amount.
But in case if the date is fixed for repayment of the principal money in the contract
deed then the mortgagee is entitled to bring a suit for sale.4 This is the perfect
example of anomalous mortgage5 which is known as “simple mortgage
usufructuary”.
Fourthly, the English Mortgage6. Here the mortgagee can file a suit for sale of
mortgaged property but he is not entitled to file a suit for the foreclosure. So I will
not recommend it strongly though the mortgage property is transferred absolutely
but on payment of mortgage money on the said date mortgagee will have to
retransfer the property.
3 Section 58 (d) of Transfer of Property Act, 1882
4 Ramayya v. Guruva,14 Mad. 232
5 Section 58 (g) of Transfer of Property Act, 1882
6 Section 58 (e) of Transfer of Property Act, 1882

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Lastly in case of Mortgage by Deposit of Title deed7 which is usually used by the
banks as a process to give loan, if my client is a banking organization then
ofcourse they should go for this kind of mortgage which will be helpful for both
the mortgagor and mortgagee. The Banks gave 40%-60% of the market value of
mortgaged property as loan by only deposition of the title deed. The Mortgage
Loans in India is provided against collateral security such as industrial property,
urban commercial complex, residential house or apartment, possessed in the name
of the receiver of the loan. But here it is a risk to found out the credibility of the
mortgagor but as banking sector is very organized and professional sector it’s now-
a-days very easy to verify the authenticity of the mortgagor.
The mortgagee in case of equitable mortgage has the right to sell the property after
filing a suit and getting a decree from a court. However in certain circumstances, a
mortgagee has a right of sale without the intervention of the court under certain
circumstances mentioned in Section 69 of Transfer of Property Act.
So in concluding remark after discussing all the mortgages I felt that as in case of
mortgage by conditional sale the remedy is suit for foreclosure. In this case, the
condition of the mortgage itself provides that in default of payment on the
stipulated date the mortgage shall became sale in favour of mortgagee.
Accordingly, after the due date the mortgage works out as a sale of mortgaged
property and mortgagee becomes owner of the property in satisfaction of the debt.
Thus, in a mortgage by conditional sale the appropriate remedy for the mortgagee
is to deprive the mortgagor from redeeming the property.
So if the lender is giving loan on personal capacity then he must chose mortgage
by conditional sale as he will have the right to foreclosure for which he can get the
7 Section 58 (f) of Transfer of Property Act, 1882

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property in reasonably low price than market value in case of non payment and can
debar the mortgagor to redeem his property. The banks and financial institutions
are empowered to carry out the legal process to enforce the securities for recovery
of their loans while the other creditors such as individuals, association of persons
have to undergo the rigmarole of court proceedings.