Vol. 12 · pages 546–550

525THE TRANSFER OF PROPERTY ACT 2. Section 69 provides exceptions to this rule. (i) Where the mortgage is an English mortgage and neither the mortgagor or the mortgagee is a Hindu, Mohamedan or Buddist or a member of a community notified in Gazette, (ii) Where a power of sale is expressly given by the deed and the mortgagee is the S. of S. (iii) Where a power of sale is expressly given by the deed and the property or any part of it was on the day of the execution of the deed situated in the towns of Bombay, etc. Section 69 A. 3. The mortgagee who has the power (as distinguished from the right) to sell without the intervention of the Court is also entitled to appoint a receiver by writing signed by him or on his behalf. 4. The exercise of this power of sale or power of appointing a receiver is to notice to the mortgagor. 5. The notice must be in writing requiring payment of the principal money and default for three months. Section 73. I Mortgagee’s Right to proceeds of sale 1. When property is sold for failure to pay arrears of revenue or other public charges and such failure is not due to default by the mortgagee, the mortgagee is entitled to claim the balance of the sale proceeds. 2. Similarly if he mortgage property is compulsorily acquired, the mortgagee shall be entitled to claim payment of the mortgage money out of the amount due to the mortgagor as compensation. 3. His claim shall prevail against all except those of the prior encumbrances. 4. The claim may be enforced although mortgage money has not become due. II. Rights of the mortgagee to the maintenance of the Security in tact during the continuance of the mortgage. I. Right to accession—Section 70.

526 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES II. Right to renewed lease—Section 71. III. Right to preserve property—Section 72. Section 70 1. § Right to accession. 1. The mortgagee is entitled to the accession for the purpose of his security if the accession is made after the date of the mortgage. 29 Cal. 803. Where two mortgages were executed on a land on which there was a house and thereafter two new houses were built by the mortgagor on the land held that they were accessions on which a mortgagor could rely for security. If the house was built before mortgage, he could not. He could not if it was built after decree although the section does not say so. This is subject to a contract to the contrary. Section 71. 2. § Right to the benefit of a renewed lease. He will be entitled to the benefit of the new lease for the purposes of his security. This is subject to a contract to the contrary. Section 72. 3. § Right to preserve the property. 1. A mortgagee may spend such money as is necessary— (i) for the preservation of the mortagage property from destruction, forfeiture or sale. (ii) for supporting the mortgagor’s title to the property. (iii) for making his own title thereto good against the mortgagor. (iv) when the mortgaged property is a renewable leasehold, for the renewal of the lease. (v) he may insure if the property is insurable and add the cost to the principal money.

527THE TRANSFER OF PROPERTY ACT Right of mortgage to Priority I. PRIORITY BY TIME. 1. The general rule regarding priority in the matter of transfers of interests in immovable property is laid down in Section 48 of the T. P. Act. 2. The same rule applies to questions in regard to mortgages, so that priority of mortgages in India depends upon the respective dates of their creation, the earlier in date having precedence over the latter— 56 Cal. 868. 3. Section 78 is an exception to this rule. It lays down that the Court would postpone the prior mortgagee to the subsequent mortgagee where the prior mortgagee has, through fraud, misrepresentation or gross neglect, induced the subsequent mortgagee to advance money on the security of the mortgaged property. Misrepresentation: 1. Is defined in Section 18 of the Indian Contract Act. 2. It does not necessarily mean fraudulent misrepresentation. Fraud Gross Negligence. There is a difference between English and Indian Law. According to English Law gross negligence means negligence amounting to fraud. According to Indian Law gross negligence is different from fraud. II. PRIORITY BY PAYMENT. Q.—Can a mortgagee acquire priority over an intermediate mortgagee by buying the rights of an earlier mortgagee ? Section 93 1. A mortgagee cannot acquire priority over an intermediate mortgagee by paying off a prior mortgagee whether he pays with or without knowledge of the intermediate mortgagee.

528 DR. BABASAHEB AMBEDKAR : WRITINGS AND SPEECHES 2. A mortgagee making a subsequent advance to the mortgagor, shall not acquire priority in respect of such subsequent advance over an intermediate mortgagee, whether he makes the advance with or without the knowledge of the intermediate mortgagee. Section 79 This Section forms an exception to the second rule laid down in Section 93. Under Section 79. A subsequent mortgagee having notice of the prior mortgage is postponed in respect of any subsequent advance if the prior mortgage is made to secure future advances and the subsequent advance does not exceed the maximum. Right of Mortgagee to Marshalling Section 81. Section 82. Question of Marshalling 1. This arises when two or more properties are mortgaged to two different mortgagees in such a way that both properties are subject to the mortgage rights of one mortgagee while only one is subject to the mortgage rights of the other. Illus. A is the owner of two estates—Whiteacre and Blackacre. A mortgages Whiteacre and Blackacre to B and thereafter mortgages Blackacre to C. The position that arises is this. B has a mortgage over Whiteacre as well as Blackacre. C has a mortgage over Blackacre only. From the standpoint of realizing the mortgage money B has a right to sell both Whiteacre as well as Blackacre. While C has a right to sell only Blackacre. If B were allowed to exercise his rights as a mortgagee it would result in prejudice to the rights of C.

529THE TRANSFER OF PROPERTY ACT In order to protect C equity invented the doctrine of marshalling—under this equity compelled B to proceed first against that property which is not the subject-matter of security for the debt of another mortgagee. This is embodied in Section 81. Note.—1. It is unnecessary for the mortgagee to have had no notice of the former mortgage in order that he may be able to claim the benefit of marshalling. zz