Section 60A Of The Transfer Of Property Act,1882

Section 60A Of The Transfer Of Property Act,1882

Author : Abhay Pratap

This article will discuss section 60A of the Transfer of Property Act, 1882 (hereinafter referred as ‘Act’). But before discussing the section, it is necessary to know a few things beforehand.

Mortgage :  

Mortgage means the transfer of an interest in any particular immovable property. It is done to secure the payment of money which is advanced or which has to be advanced by way of loan.

Mortgagor :

The person who transfers such interest.

Mortgagee :

The person to whom such interest is transferred.

As per section 60 of the Act, after the payment by mortgagor to mortgagee, mortgagor has got a right which is known as ‘Right to Redeem’ or ‘Right to Redemption’. Under this right, mortgagor can require the mortgagee to deliver back to the mortgagor all the documents, possession of the property, Non Obligation Certificate (NOC) etc.

Now is the time to discuss section 60A of the Act. As per the right of redemption, after the fulfilment of the mortgage condition, when mortgagor gets the right to acquire his immovable property back which was transferred to mortgagee as per the mortgage condition. Section 60A of the Act allows the mortgagor to require the mortgagee to assign the mortgage debt and transfer mortgagor’s property to such third party as mortgagor may direct and the mortgagee shall be  bound to obey such direction of the mortgagor. If the mortgagee does not obey the direction of the mortgagor, the mortgagor can go to court under section 60 of the Act to file the suit for redemption.

This section takes care of the situation when mortgagor takes money from a third party to pay the mortgagee and for the security of such third party’s money, an interest is transferred to that third party in that same property by the mortgagor. So, after payment to the mortgagee, the mortgagor has the right to direct the mortgagee to transfer such property to that third person under section 60A of the Act which.

Also, if mortgagor does not want to borrow money from third party and then to pay to mortgagee because it seems a long process, then mortgagor can direct the mortgagee transfer the property on which he has interest against mortgage-money to third party and then that third party can pay the mortgage-money to the mortgagee and free his interest on the property and will create his interest upon the same property. There can be many instances

One more thing to add is that there is no applicability of section 60A of the Act in the cases where such property is or has been in the possession of the mortgagee. There are various kinds of mortgages defined under section 58 of the Act. In some of them, possession of the property is transferred and in some cases the property itself is transferred with some conditions against the mortgage-money. So in those mortgages where property has been in the possession of the mortgagee, section 60A would not apply which means mortgagor, after fulfilling the required conditions of the mortgage, cannot direct mortgagee as a matter of right to transfer such property to any third person. The simple explanation for this is that there is a difference between the transfer of possession of the property and transfer of the property itself and you can transfer the property to any other person only when you have the property itself and not when you only have the possession of the property. If the mortgagee has property as well as the possession of the property, still he can be directed under section 60A of the act to transfer such property.

Section 60 of the Act says that whenever such property is to be transferred to any third party under section 60A of the Act, all the expenses that occur in such transfer would be payable by mortgagor.             

Let us understand another instance. If, on a property, there are interests of multiple people, under mortgage or otherwise, then the right under section 60A of the Act can be enforced by Mortgagor as well as those having interest or encumbrance in such property who are known as encumbrancers.

If there is a mortgagor and an encumbrancer then the requisition of the encumbrancer shall prevail over the requisition of the mortgagor which means that the right to enjoy or use the property having encumbrance over it will be given to the to encumbrancer first and not to the mortgagor. And if there are multiple encumbrancers of  a property then requisition of the prior encumbrancer shall prevail over that of a subsequent encumbrancer. In layman language, if there are more than one encumbrancer of a property which means if there are more than one person having interest in the same property then in such case the person who got the encumbrance or the interest in that property earlier will be given priority to enjoy/use such property than those who got encumbrance or the interest in the same property thereafter. It works on a first come first serve basis.

Let us dig into it a bit more. when the mortgagor, under section 60A of the Act, directs the mortgagee to transfer the property to the new third party. He can do so only if there is no other person having interest in such property. If there is any person other than the mortgagor having encumbrance in that property, mortgagor can not direct mortgagee to transfer that property to any new third party because that would create another encumbrance on the property without paying the mortgage-money to the earlier mortgagees. This does not stop mortgagor from mortgaging the same property to multiple mortgagees. What it stops is, is the enjoyment/use of the property by the subsequent encumbrancers before the earlier encumbrancers. It says that if mortgage is of a kind where property is to be transferred to the mortgagees then property is to be transferred, unless the mortgage-money condition is fulfilled, to the one whose encumbrance existed on the property and thereafter, to the one whose encumbrance existed subsequently. And unless all the mortgagees or encumbrancers have been paid their mortgage-money back and any other required conditions have been filled or unless they have been transferred the mortgaged property to enjoy, that property cannot be cannot be transferred back to or enjoyed by the mortgagor.