Section 68 of The Transfer of Property Act, 1882
1[68. Right to sue for mortgage-money.-- (1) The mortgagee has a right to sue for the mortgagemoney in the following cases and no others, namely:--
- (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 section 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, 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.]
Summary
- Section 68 of the Transfer of Property Act, 1882, outlines the exclusive cases where a mortgagee can sue the mortgagor for the mortgage money instead of pursuing foreclosure or sale.
- The mortgagee can sue for the money if the mortgagor binds himself to repay it, but a transferee from the mortgagor cannot be sued personally under this clause.
- If the mortgaged property is destroyed or becomes insufficient without the fault of either party, the mortgagee can sue for the money if they gave the mortgagor a chance to provide more security and the mortgagor failed to do so.
- The mortgagee can sue if they are deprived of the security due to the mortgagor's wrongful act or default.
- If the mortgagor fails to deliver or secure possession of the property to a mortgagee who is entitled to possession, the mortgagee can sue for the money.
- When a suit is brought on the personal covenant or for destroyed security, the court has the discretion to stay the suit until all remedies against the property are exhausted, unless the mortgagee abandons the security.
Practical examples
FAQ
1. Can a transferee of a mortgagor be sued for the mortgage money under Section 68 of the Transfer of Property Act, 1882?
No, under Section 68 of the Transfer of Property Act, 1882, a transferee from the mortgagor or from their legal representative is not liable to be sued for the mortgage money based on the mortgagor's personal promise to repay.
2. What happens under Section 68 of the Transfer of Property Act, 1882, if the mortgaged property is destroyed by a natural disaster?
Under Section 68 of the Transfer of Property Act, 1882, if the property is destroyed without fault, the mortgagee can sue for the money only after giving the mortgagor a reasonable opportunity to provide further sufficient security and the mortgagor fails to do so.
3. Can a mortgagee sue for the mortgage money if the mortgagor fails to deliver possession under Section 68 of the Transfer of Property Act, 1882?
Yes, under Section 68 of the Transfer of Property Act, 1882, if the mortgagee is entitled to possession of the property and the mortgagor fails to deliver it or secure it without disturbance, the mortgagee can sue for the mortgage money.
Test yourself
Q1.Under Section 68 of the Transfer of Property Act, 1882, if the mortgaged property is partially destroyed by a fire without any fault of the mortgagor or mortgagee, what must the mortgagee do before they can sue for the mortgage-money?
Q2.Under Section 68 of the Transfer of Property Act, 1882, which of the following persons is specifically protected from being sued personally for the mortgage-money under a personal covenant to repay?
Q3.Under Section 68 of the Transfer of Property Act, 1882, what discretion does a Court have when a mortgagee sues for the mortgage-money because the mortgagor promised to repay or because the security was destroyed?
Q4.Under Section 68 of the Transfer of Property Act, 1882, which cross-references Section 66, if a mortgaged building's value falls due to a flood so that it no longer exceeds the debt by one-half, what can the mortgagee do if the mortgagor refuses to provide more security after being given a reasonable opportunity?