Property Law

M.C. Chaganlal Sowcar v. P. Anantaraman

AIR 1961 Mad 415

Facts

A possessory mortgage was created to secure a principal sum of ₹2,000.
Rent from the mortgaged house was to be adjusted towards interest.
If rent was insufficient, the mortgagors were personally liable for the deficit.
They also undertook to pay taxes and repair expenses.
The deed permitted the mortgagee to recover all amounts due from:
the mortgagors personally;
the mortgaged property; and
their other property.
A purchaser of the equity of redemption offered only the principal sum of ₹2,000.
The mortgagee demanded unpaid interest and other secured expenses as a condition of redemption.

Whether “mortgage money” included unpaid interest and other amounts secured by the deed.
Whether the mortgagor could redeem by paying only the original principal.

Under Sections 58 and 60 TPA, redemption requires payment or tender of the mortgage money.
Mortgage money includes:
principal; and
interest or other sums whose payment is secured by the mortgage.
In the absence of a contract to the contrary, interest stipulated in a mortgage is ordinarily charged upon the mortgaged property.
A personal covenant to pay does not necessarily exclude a simultaneous proprietary security.

The deed contemplated that rent would normally discharge interest.
This explained why one clause referred to repayment of principal when possession was returned.
That clause could not be read in isolation.
The deed expressly authorised recovery of the whole “amount due” from the mortgaged property.
It therefore created both:
personal liability; and
security over the property.
If the rent failed to cover interest, the unpaid balance remained secured.
Taxes and repair expenses paid by the mortgagee were also recoverable where the deed so provided.
The purchaser of the equity of redemption stepped into the mortgagor’s position and could not demand release of the property without satisfying the entire secured liability.
The amount due therefore had to be calculated before a redemption decree could be passed.