ANOMALOUS MORTGAGE- A STUDY

Property Law

SUBMITTED BY

Bomkesh Mandal

3rd year 5th Semester

UID: SM01178017

Faculty In Charge

Dr. Kasturi Gakul

Assistant Professor of Law

National Law University and Judicial Academy, Assam

Table of cases ii

1. Introduction 1

i. Overview 1

ii. Research question 1

iii. Literature review 1

iv. Aims 2

v. Objective 2

vi. Scope and limitation 3

vii. Research methodology 3

2. Concept of Mortgage 4

3. Conceptual study of Anomalous Mortgage 6

4. Judicial pronouncements on Anomalous Mortgage 9

5. Conclusion 13

6. Bibliography iii

i
TABLE OF CASES

1. Ramakkammal v. C.G. Subbarathnam Iyer and Ors.

2. Chadumrai v. Rani Navli
3. N.K. Rajaraja Varman Thirumalpad v. K.K. Krishnan Nair
4. Amarchand v. Killa Morar
5. Munni Lal v. Phuddi Singh
6. Pitambar Purkait v. Madhu Sudan
7. Vaddiparthi v. Appalanarasimhulu
8. Sita Nath v. Thakurdas
9. Chellakutti Naicken v. Vengappa Pillai
10. Pate Muhamad v. Davood
11. Ujagar Lal v. Bahadur Lokendra Singh
12. Ramdayal and ors. v. Bhanwarlal and ors.

ii
 CHAPTER- I

INTRODUCTION

1.1 Overview

The project aims to conduct a conceptual study on the concept of anomalous mortgage. As
provided in section 58(g) of the Transfer of Property Act, 1882, the project tries to discuss the
concept with the help of relevant case laws as the concept of anomalous mortgages in itself is
very varied and different case laws accordingly has shaped it and still continues to do so. As in
the upcoming chapters it is discussed how combination of other mortgages as mentioned in
article 58 of the Transfer of Property Act, 1882 forms an anomalous mortgage and also how
other forms of anomalous mortgage takes place in different situations. Different judicial
pronouncement have discussed the concept of anomalous mortgage within them which may
not be within the category of combination of other mortgages but are anomalous in nature and
are categorised as anomalous mortgage and they have been accordingly discussed.

1.2 Research Questions

The Research questions formulated by the researcher are as followed:

Q1. What is an anomalous mortgage?

Q2. What are the various types of an anomalous mortgage?

1.3 Literature Review

In his book Mulla 1 has vividly discussed the concept of Mortgage given under the Transfer of
Property Act, 1882. Chapter IV of this book has been wholly dedicated to the concept of
Mortgages. This book helped the researcher in knowing the concept of Mortgage and the
concept of Anomalous Mortgage. This chapter lucidly discuses the constituent of an anomalous
mortgage and elaborates it with the help of catena of judgements. This book also helped the

1
SIR DINSHAH FARDUNJI M ULLA, THE TRANSFER OF PROPERTY ACT, 1882, 390 (5th Edition, 1985)
1
researcher to understand the different types of anomalous mortgages. This book provided the
researcher a deep insight into the topic.

Sinha2 in his book lucidly explains the concept of gift. Chapter IV of this book is dedicated to
the concept of Mortgage as given under Transfer of Property Act, 1882. This book emphasised
on each and every constituent of the Mortgage and discusses it in brevity. This book helped the
researcher in understanding the concept of anomalous mortgages.

More3 in his article discussed on the types of anomalous mortgage and provided with relevant
judicial pronouncements. The article briefly summarises the concept of anomalous mortgage
as given under Transfer of Property Act, 1882. This article helped the researcher immensely
knowing the types of anomalous mortgage other than that of the combination of the different
mortgages substantiating it with the help of various judgements rendered by the different
Courts.

1.4 Aim(s)

The aim of this project is to understand the concept of ‘anomalous mortgage’ under the Transfer
of Property Act, 1882 with the help of illustration and settled judicial pronouncement.

1.5 Objective(s)

The objectives of the research paper are as follows:

a) to study the concept of ‘mortgage’ and anomalous mortgage as enshrined in the Transfer of
Property Act, 1882, with the help of various illustration and settled judicial pronouncements;

b) to analyse the various types of anomalous mortgage; and

c) to study the case laws relating to anomalous mortgage under TP Act.

2
DR R. K SINHA, THE TRANSFER OF PROPERTY, 274 (18th Edition, 2019).
3
Hemant More, Types of Mortgage, The Facts factor (Dec.10, 2020, 03:50 PM),
https://thefactfactor.com/facts/law/civil_law/topa/types-of-mortgages/2655/
2
1.6 Scope and Limitation

The Scope of the project is confined to understanding the concept of anomalous, assessing the
types of anomalous mortgage and knowing the case laws relating to concept.

1.7 Research Methodology

In this project, doctrinal research was involved. Doctrinal Research is a research in which
secondary sources are used and materials are collected from libraries, archives, etc. Books,
journals, articles were used while making this project. Explanatory type of research was used
in this project. Secondary source of data collection was used which involves collection of data
from books, articles, websites, etc.

The researcher has used the BLUEBOOK (20th ed.) format for citation.

3
 CHAPTER- II

THE CONCEPT OF MORTGAGE

Section 58 of the Transfer of Property Act, 1882 defines a mortgage as the transfer of an interest
in specific immoveable property for the purpose of securing the payment of money advanced
or to be advanced by way of loan, an existing or future debt, or the performance of an
engagement which may give rise to a pecuniary liability.

Mortgage as defined in this section is transfer of an interest in some immovable property. It is

not transfer of all the interests but only of some interest in the property. The purpose of this
transfer of interest is to give security for repayment of loan. Therefore, where a person
mortgages his property, the legal effect is that there is a transfer of an 'interest' of that property
in consideration of money advanced to him by the money-lender. In case the loan could not be
repaid, the money-lender can recover his money on the basis of that 'interest'. The loan may
either be present or might have been taken in the past. It may also be in the form of any
pecuniary liability of the mortgagor towards mortgagee. 4

Mortgage is the transfer of an interest in some immovable property which is generally given
by way of security for a loan. A person who takes a loan and gives some security for repayment
of the loan in the form of transfer of some interest in any immovable property, it is called a
mortgage of property. The ownership of the property remains in the debtor but some of his
interests in the property are transferred to the creditor who has given loan. In case the advanced
money could not be recovered by the creditor who is the person advancing the money he can
recover his money on the basis of his interest in that property. Hence, it can be said that
mortgage acts as the security of the creditor.

The essential elements of a mortgage are:

I. Parties to a mortgage.
II. Transfer of interest of some immovable property.
III. The purpose of interest must be for the purpose of securing the money advanced or
performance of an engagement which may give rise to some pecuniary liability.

4
DR R. K SINHA, THE TRANSFER OF PROPERTY, 274 (18th Edition, 2019).
4
Section 58 of the Transfer of Property Act, 1882 contemplates six kinds of mortgage:—

(1) Simple Mortgage

(2) Mortgage by conditional sale

(3) Usufructuary Mortgage

(4) English Mortgage

(5) Mortgage by deposit of title-deeds

(6) Anomalous Mortgage

5
 CHAPTER- III

CONCEPTUAL STUDY OF ANOMALOUS MORTGAGE

Anomalous in its truest sense means inconsistent or deviant from what is normal or expected.

According to section 58(g) of the Transfer of Property Act, 1882 a mortgage which is not a
simple mortgage, a mortgage by conditional sale, an usufructuary mortgage, an English
mortgage or a mortgage by deposit of title-deeds within the meaning of this section is called
an anomalous mortgage.

Thus anomalous mortgage in its truest sense means a mortgage that is different from other
mortgages and going by the definition of the section, anomalous mortgage can be considered
as all the other types of mortgages that don’t fall within the given categories of mortgages of
section 58 which is valid and not inconsistent with any law.

Hence, it can be said that any form of mortgage which doesn’t fall under the other five
categories of mortgages or within the meaning of this section can be considered as an
anomalous mortgage.

It can also be said that different combinations of mortgages those are mentioned in section 58
of Transfer of Property Act, 1882 other than the anomalous mortgage can also be considered
as anomalous mortgage as it was said in Ramakkammal v. C.G. Subbarathnam Iyer and Ors. 5
that, “mortgages enumerated and defined in the previous clauses were alone excluded from the
definition of anomalous mortgage and not their combinations. This omission, it is claimed, is
indicative of the view that the legislature intended to treat the combinations
as anomalous mortgages.”

As described in Chadumrai v. Rani Navli6, “anomalous mortgages take innumerable forms

moulded either by custom or the caprice of the creditor—some are combinations of the simple
forms, others are customary mortgages prevalent in particular districts, and to these special
incidents are attached by local usage. Such are the kanom, otti, and peruartham mortgages of
Madras.”

5
(1953) Mad 13, (1952) IIMLJ 416
6
(1943) A.A. 337 F.B.
6
The different instances of anomalous mortgage can be:

I. Combination of Simple Mortgage and Usufructuary Mortgage:

An anomalous mortgage, can be a combination of simple and usufructuary mortgages. In this

category of mortgage there is a personal covenant with an express or implied right of sale and
the mortgagee is given also possession of the property so that he may adjust his loan from the
rents and profits of the property or the interest of the property, the mortgage is neither a simple
mortgage nor usufructuary mortgage, rather a combination of the two.

In a simple mortgage, the mortgagor does not transfer the possession of mortgage-property, the
mortgagee is entitled to recover the mortgage-money personally from the mortgagor by sale of
the property. But in case of anomalous mortgage the parties agree that the mortgagee will also
have possession and right of enjoyment of the property.

In this category of mortgage, the mortgagee is in possession and pays himself the debt out of
the rents and profits and there is also a personal covenant with an express or implied right of
sale. The property is only collaterally pledged as in the case of a simple mortgage, but the
mortgagee is given the usufruct of it either by allowing him to take the rents and profits or by
giving him a lease for a fixed period. 7

In this case of an anomalous mortgage the anomalous mortgage unlike simple or usufructuary
mortgage the mortgagee has the right of both enjoying the benefits of rents or profits arising
from the property for the purpose of settling the loan and the right of selling the property upon
the event of default.

II. Mortgage Usufructuary by Conditional Sale:

This is a form of an anomalous mortgage which is a mixture of both the elements of

usufructuary and conditional sale mortgage. Here, the conditions are that of a usufructuary
mortgage limited by the time element of a mortgage by conditional sale. Hereby, the mortgagee
is first entitled to take the possession and enjoyment of the property and with a condition

7
SIR DINSHAH FARDUNJI M ULLA, THE TRANSFER OF PROPERTY ACT, 1882, 390 (5th Edition, 1985)
7
imposed on the mortgager that if the he fails to repay within a stipulated time the mortgagee
shall have a right to cause the sale of the property. Thus, it can be implied that where the
mortgage is a usufructuary mortgage for a fixed time and there exist a condition that upon the
expiry of such time period the mortgage shall operate as a mortgage by conditional sale.

The anomaly that exists in this mortgage is usufructuary mortgage doesn’t have a fixed time
period but, fixed time period is a feature of mortgage by conditional sale and thus it contains
the elements of both the mortgages and thus falls in the category of anomalous mortgage.

III. Customary Mortgages

Customary mortgages are mortgages to which special incidents are attached by local usage.
Otti is a customary mortgages prevailing in the southern states of India and accordingly in the
case of N.K. Rajaraja Varman Thirumalpad v. K.K. Krishnan Nair,8 Ramaswami, J explained
the concept of otti as follows:

“Otti is a mortgage with possession, the mortgagee enjoying the entire produce of the land,
the landlord merely retaining the proprietary title and the power to redeem after the lapse of
12 years. It carries with it a right of pre-emption in favour of the mortgagee.”

Otti at first instance appears to be a usufructuary mortgage but since it has the time element of
12 years it has an anomaly and accordingly can be considered as an anomalous mortgage.

IV. Other Mortgages

Other anomalous mortgages are very varied and have been discussed in the upcoming chapter
with the aid of relevant case laws.

8
(1956) 2 MLJ 46
8
 CHAPTER-IV

JUDICIAL PRONOUNCEMENTS ON ANOMALOUS MORTGAGE

The concept of anomalous mortgage can be further understood by referring to various judicial
pronouncements that have been adjudicated from time to time:

SIMPLE MORTGAGE USUFRUCTUARY

The Bombay case of Amarchand v. Killa Morar9 is a typical simple mortgage usufructuary.
The mortgagee was put in possession and authorized to retain possession till payment of the
mortgage money. Also there was a personal covenant to pay and an agreement that the debt
was recoverable from the mortgaged land and from the mortgagor personally.

In the case of Munni Lal v. Phuddi Singh,10 the Mortgage deed provided for the sale of the
property on the non-payment of the amount within stipulated time by the mortgagee for the
recovery of the amount. But, the deed also provided for the recovery of the amount by the
process of receiving rents from the shops situated at the premises of the property. The court
held the despite the mortgagee having the rights to sell off the property as in simple mortgage
also had the right to receive the benefits arising from the property as in the case of a
usufructuary mortgage. Thus, it was a simple mortgage usufructuary.

In the case of Pitambar Purkait v. Madhu Sudan,11 it was said that, “It is well settled that where
an instrument of mortgage gives a right to possession and also contains a covenant to pay, thus
presenting a combination of a usufructuary and a simple mortgage, the two rights are
independent and the mortgagee may sue for sale although he may have given up possession
and the right accrues immediately after due date is passed.” Thus explaining the right of a
mortgagee in the case of simple mortgage usufructuary.

9
(1903) 27 Bom. 600.
10
AIR 1987 All. 155.
11
(1910)6 I.C. 153.
9
MORTGAGE USUFRUCTUARY BY CONDITIONAL SALE

In the case of Vaddiparthi v. Appalanarasimhulu,12 it was held by the Madras High Court that
where the mortgage was with possession, with the condition adjusting the rents and benefits
off against interest of the amount and the principal to be repaid in five years and if not paid the
mortgage to work out into a sale at the expiry of twenty years. Hence, it was a combination of
a mortgage by a conditional sale and with the elements of a usufructuary mortgage.

The case of Sita Nath v. Thakurdas13 was also a case of a usufructuary mortgage for a fixed
period with profits in lieu of interest, having a condition that if the principal amount was not
paid at the end of the period the mortgagee was to have a right of selling off the property.

OTHER ANOMALOUS MORTGAGES

In the case of Chellakutti Naicken v. Vengappa Pillai14, the point argued in this case was that
the mortgage, in question is an anomalous mortgage or not and, therefore the provisions
of Section 98 of the Transfer of Property Act and its application had been discussed, which
enforces the rights and liabilities on the parties as mentioned in the mortgage deed.

The petitioner placed reliance upon the case reported as Pate Muhamad v. Davood,15 for the
purpose of constituting the document as an anomalous mortgage.

The mortgage deed was drafted as such which makes it is quite clear that the parties intended
to create an ordinary possessory mortgage. The only condition added is that if the mortgagor
failed to pay the mortgage amount within a certain time the transaction should be treated as a
sale. Adding a clause of this kind to an ordinary possessory mortgage would not make it an
anomalous mortgage. The clause puts a clog on the equity of redemption. That by itself would
not convert an ordinary possessory mortgage or a usufructuary mortgage into an anomalous
mortgage.

12
(1921) 41 Mad. L.J. 563.
13
(1919) 46 Cal. 448.
14
AIR 1925 Mad 366.
15
(1915) 39 Mad. 1010.
10
The case, Pate Muhamad v. Davood, is distinguishable on the facts. There the words are, "if
they do not act according to those conditions, they will surrender the house and the deed
treating the transaction as a sale." That shows evidently that possession did not pass to the
mortgagee but remained with the mortgagor. Here, possession was given to the mortgagee.

Thus, it was held that the mortgage cannot be considered as an anomalous mortgage.

In the case of Ujagar Lal v. Bahadur Lokendra Singh16 it was found that a mortgage without
possession with the mortgagor not to redeem before five years and the mortgagee had given a
right of foreclosure. The mortgage deed provided that the property was mortgaged without
possession. It contained a covenant to pay the principal and the accumulated compound interest
at the end of the period of five years - thirdly, a provision that the mortgagors were not to be
entitled to redeem earlier than at the expiration of the five years, and finally it provided that in
case of non-payment of the entire amount of principal, interest and compound interest the
mortgagees would, after the expiry of the stipulated period, have power to obtain proprietary
possession of the entire property mortgaged by bringing a suit for a decree for foreclosure and
that the mortgagors would not have any objection thereto.

It was held that the mortgage was not a mortgage by conditional sale but was an anomalous
mortgage.

In the case of Ramdayal and ors. v. Bhanwarlal and ors. 17 it was held that, the chief
requirement of a pure usufructuary mortgage is that the mortgage must deliver or bind himself
to deliver possession to the mortgagee and that the mortgage money, including interest, should
be realised out of the usufruct of the mortgaged property and the mortgagee should have no
remedy except to enjoy the usufruct of the mortgaged property. If the mortgagee is entitled to
recover any part of the mortgage-money, which in general includes the interest on the principal
sum secured by the mortgage, it cannot be a pure usufructuary mortgage and will amount to an
anomalous mortgage.

16
AIR (1941) All. 169 (171).
17
ILR (1971) 22 Raj. 1229.
11
Where both the principal and the interest were secured by the mortgage of the properties and
the mortgagors took personal liability for the payment of the interest which was a part of the
mortgage money and which was also secured by the mortgage of the properties the document
cannot be considered as a pure usufructuary deed.

It was held as an anomalous mortgage.

12
 CHAPTER-V

CONCLUSION

Anomalous mortgage is a mortgage that is anomalous in nature and has various forms. It can
be a combination of the different mortgages as provided in the section 58 of the TP Act or it
can be derived from the customs or caprices of the mortgagor or as moulded by the terms and
conditions as mentioned in the mortgage deed.

Accordingly it was found that anomalous mortgage can be a combination of a simple and
usufructuary mortgage or a combination of a simple and a mortgage by a conditional sale also
the conditions arising in the title deeds in cases to case, those do not fall within the categories
of the given mortgages other than anomalous mortgage constitute an anomalous mortgage. The
crux of understanding an anomalous mortgage is that, it is a mortgage but anomalous in nature
i.e., different from other mortgages. It cannot be categorised by putting them into pigeon holes
as these are varied and different case laws have interpret differently and have classified them
into anomalous mortgages. Hence, the concept of anomalous mortgages is vast and varied in
types.

Thus, it can be concluded that anomalous mortgage by its very name is a type of mortgage that
is anomalous in nature and its types and categories are varied.

13
 BIBLIOGRAPHY

LIST OF BOOKS

DinshawFardunji Mulla, THE TRANSFER OF PROPERTY ACT, 5th Ed. 1985,

LexisNexis, Butterworth Wadhwa, Nagpur.

Dr. R.K Sinha, THE TRANSFER OF PROPERTY ACT, 18th Ed. 2019, Central Law
Agency, Allahabad.

Ratanlal & Dhirajlal, Textbook on Transfer of Property Act, 6th Ed. 2020, LexisNexis,
Butterworth Wadhwa, Nagpur.

WEB SOURCES

Hemant More, “Types of Mortgage”,

https://thefactfactor.com/facts/law/civil_law/topa/types-of-mortgages/2655/

iii