Section 72 in The Transfer of Property Act, 1882
Title: Rights of mortgagee in possession.
1[A mortgagee] may spend such money as is necessary—
2* * * * *
(b) for 3[the preservation of the mortgaged property] from destruction, forfeiture or sale;
(c) for supporting the mortgagor's title to the property;
(d) for making his own title thereto good against the mortgagor; and
(e) when the mortgaged property is a renewable lease-hold, for the renewal of the lease;
and may, in the absence of a contract to the contrary, add such money to the principal money, at the rate of interest payable on the principal, and, where no such rate is fixed, at the rate of nine per cent. per annum:
4[Provided that the expenditure of money by the mortgagee under clause (b) or clause (c) shall not be deemed to be necessary unless the mortgagor has been called upon and has failed to take proper and timely steps to preserve the property or to support the title.]
Where the property is by its nature insurable, the mortgagee may also, in the abs ence of a contract to the contrary, insure and keep insured against loss or damage by fire the whole or any pant of such property; and the premiums paid for any such insurance shall be 5[added to the principal money with interest at the same rate as is pay able on the principal money or, where no such rate is fixed, at the rate of nine per cent. per annum]. But the amount of such insurance shall not exceed the amount specified in this behalf in the mortgage-deed or (if no such amount is therein specified) two-thirds of the amount that would be required in case of total destruction to reinstate the property insured.
Nothing in this section shall be deemed to authorise the mortgagee to insure when an insurance of the property is kept up by or on behalf of the mortgagor to the amount in which the mortgagee is hereby authorised to insure.
1. Subs. by s. 37, ibid., for certain words.
2. Clause (a) omitted by s. 37, ibid.
3. Subs. by s. 37, ibid., for "its preservation".
4. Ins. by Act 20 of 1929, s. 37.
5. Subs. by s. 37, ibid., for certain words.
Title: Right to proceeds of revenue sale or compensation on acquisition.
1[73. Right to proceeds of revenue sale or compensation on acquisition.-- (1) Where the mortgaged property or any part thereof or any interest therein is sold owing to failure to pay arrears of revenue or other charges of a public nature or rent due in respect of such property, and such failure did not arise from any default of the mortgage e, the mortgagee shall be entitled to claim payment of the mortgage-money, in whole or in part, out of any surplus of the sale-proceeds remaining after payment of the arrears and of all charges and deductions directed by law.
(2) Where the mortgaged property or any part thereof or any interest therein is acquired under the Land Acquisition Act, 1894 (1 of 1894), or any other enactment for the time being in force providing for the compulsory acquisition of immoveable property, the mortgagee shall be entitled to claim payment of the mortgage-money, in whole or in part, out of the amount due to the mortgagor as compensation.
(3) Such claims shall prevail against all other claims except those of prior encumbrances, and may be enforced notwithstanding that the principal money on the mortgage has not become due.]
1. Subs. by s. 38, ibid., for section 78.
[Right of subsequent mortgagee to pay off prior mortgagee.] Rep. by the Transfer of Property (Amendment) Act, 1929 (20 of 1929), s. 39.
[Rights of mesne mortgagee against and subsequent mortgagees.] Rep. by s. 39, ibid.
Title: Liabilities of mortgagee in possession.
When, during the continuance of the mortgage, the mortgagee takes possession of the mortgaged property,--
(a) he must manage the property as a person of ordinary prudence would manage it if it were his own;
(b) he must use his best endeavours to collect the rents and profits thereof;
(c) he must, in the absence of a contract to the contrary, out of the income of the property, pay the Government-revenue, all other charges of a public nature 1[and all rent] accruing due in respect thereof during such possession, and any arrears of rent in default of payment of which theproperty may be summarily sold;
(d) he must, in the absence of a contract to the contrary, make such necessary repairs of the property as he can pay for out of the rents and profits thereof after deducting from such rents and profits the payments mentioned in clause (c) and the interest on the principal money;
(e) he must not commit any act which is destructive or permanently injurious to the property;
(f) where he has insured the whole or any part of the property against loss or damage by fire, he must, in case of such loss or damage, apply any money which he actually receives under the policy, or. so much thereof as may be necessary, in reinstating the property, or, if the mortgagor so directs, in reduction or discharge of the mortgage-money;
(g) he must keep clear, full and accurate accounts of all sums received and spent by him as mortgagee, and, at any time during the continuance of the mortgage, give the mortgagor, at his request and cost, true copies of such accounts and of the vouchers by which they are supported;
(h) his receipts from the mortgaged property, or, where such property is personally occupied by him. a fair occupation-rent in respect thereof shall, after deducting the expenses 2[properly incurred for the management of the property and the collection of rents and profits and the other expenses] mentioned in clauses (c) and (d), and interest thereon, be debited against him in reduction of the amount (if any) from time to time due to him on account of interest 3*** and, so far as such receipts exceed any interest due, in reduction or discharge of the mortgage-money; the surplus, if any, shall be paid to the mortgagor;
(i) when the mortgagor tenders, or deposits in manner hereinafter provided, the amount for the time being due on the mortgage, the mortgagee must, notwithstanding the provisions in the other clauses .of this section, account for his 4*** receipts from the mortgaged property from the date of the tender or from the earliest time when he could take such amount out of Court, as the case may be 'and shall not be entitled to deduct any amount therefrom on account of any expenses incurred after such date or time in connection with the mortgaged property.
Loss occasioned by his default.-- If the mortgagee fail to perform any of the duties imposed upon him by this section, he may, when accounts are taken in pursuance of a decree made under this Chapter, be debited with the loss, if any, occasioned by such failure.
1. Ins. by s. 40, ibid.
2. Ins. by Act 20 of 1929, s. 40.
3. The words "on the mortgage-money" omitted by s. 40, ibid.
4. The word "gross" omitted by s. 40, ibid.