Rights of the Mortgagee

Rights of the Mortgagee.

1. Right to Foreclosure or sale.
2. Mortgagee when bound to bring one suit on several mortgages.
3. Right to sue for mortgage-money.
4. Power of sale when valid.
5. Rights of mortgagee in possession.

Right to Foreclosure or sale

Section 67 of Transfer of Property Act provides that in the absence of a contract to the contrary, the mortgagee has, at any time after the mortgage- money has become due to him, and before a decree has been made for the redemption of the mortgaged property, or the mortgage-money has been paid or deposited, a right to obtain from the court a decree that the mortgagor shall be absolutely debarred of his right to redeem the property, or a decree that the property be sold. A suit to obtain a decree that a mortgagor shall be absolutely debarred of his right to redeem the mortgaged property is called a suit for foreclosure.

However, nothing of the above provisions shall be deemed-

1. To authorized any mortgagee other than a mortgagee by conditional sale or a mortgagee under an anomalous mortgage by the terms of which he is entitled to foreclose, to institute a suit for foreclosure, or a usufructuary mortgagee as such or a mortgagee by conditional sale as such to institute a suit for sale; or

2. To authorized a mortgagor who holds the mortgagee's rights as his trustee or legal representative, and who may sue for a sale of the property, to institute a suit for foreclosure; or

3. To authorized the mortgagee of a railway, canal, or other work in the maintenance of which the public are interested, to institute a suit for foreclosure or sale; or

4. To authorized a person interested in part only of the mortgage-money to institute a suit relating only to a corresponding part of the mortgaged property, unless the mortgagees have, with the consent of the mortgagor, severed their interests under the mortgage.

Right to sue for mortgage-money.

Section 68(1) provides that the mortgagee has a right to sue for the mortgage-money in the following cases and no others, namely,-

Where the mortgagor binds himself to repay the same;

1. 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;

2. 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;

3. 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.

However, 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.

Section 68(2) provides that 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, notwithstanding 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.

Power of sale when valid.

Section 69 provides that a mortgagee, or any person acting on his behalf, shall, subject to the provisions of this section have power to sell or concur in selling the mortgaged property or any part thereof, in default of payment of the mortgage-money, without the intervention of the court, in the following cases and in no others, namely:

1. Where the mortgage is an English mortgage, and neither the mortgagor nor the mortgagee is a Hindu, Muslim or Buddhist or a member of any other race, sect, tribe or class from time to time specified in this behalf by the Government, in the Official Gazette;

2. Where a power of sale without the intervention of the court is expressly conferred on the mortgagee by the mortgage-deed and the mortgagee is the government; or schedule bank as defined in Art 37 of the Bangladesh Bank Order 1972; and

3. Where a power of sale without the intervention of the court is expressly conferred on the mortgagee by the mortgage-deed and the mortgaged property or any part thereof was, on the date of the execution of the mortgage-deed, situate within the town of Dhaka or in any other town or area which the Government may, be notification in the Official Gazette, specify in this behalf.

However, as s 69(2) provides, the above power of sale must not be exercised unless and until –

1. Notice in writing requiring payment of the principal money has been served on the mortgagor, or on one of several mortgagors, and default has been made in payment of the principal money, or of part thereof, for three months after such service; or
2. Some interest under the mortgage amounting at least to Tk 500/- is in arrear and unpaid for three months after becoming due.

Provided that the power of a schedule bank under clause (b) of s 69(1) as mentioned above should further be subject to such conditions as may be prescribed in this behalf by notification in the official Gazette by the Government in consultation with the Bangladesh Bank.

Rights of mortgagee in possession.

Section 72 of TP Act provides that a mortgagee may spend such money as is necessary –

1. For the preservation of the mortgaged property from destruction, forfeiture or sale;
2. For supporting the mortgagor's title to the property;
3. For making his own title thereto good against the mortgagor; and
4. When the mortgaged property is a renewable lease-hold, for the renewal of the lease;

And may, in the absence of a contract to the contrary, add such money to the principal money, at the rate of interest payable on the principal, and, where no such rate is fixed, at the rate of nine percent per annum:

Provided that the expenditure of money by the mortgagee under clause (2) or clause (3) shall not be deemed to be necessary unless the mortgagor has been called upon and has failed to take proper and timely steps to preserve the property or to support the title.

Where the property is by its nature insurable, the mortgagee may also, in the absence of a contract to the contrary, insure and keep insured against loss or damage by fire the whole or any part of such property, and the premiums paid for any such insurance shall be added to the principal money with interest at the same rate as is payable on the principal money or, where no such rate is fixed, at the rate of nine per cent per annum. But the amount of such insurance shall not exceed the amount specified in this behalf in the mortgage-deed or (if no such amount is therein specified) two-thirds of the amount that would be required in case of total destruction to reinstate the property insured.
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